Merck 2014 Annual Report Download - page 215

210 CONSOLIDATED FINANCIAL STATEMENTS → Notes to the Group accounts
On the balance sheet date, the bank financing commitments vis-à-vis
the Group were as follows:
€ million
Financing
commitments
from banks
Utilization as of
December 31, 2014 Interest Maturity
Syndicated loan 2013 2,000.0 0.0 variable 2019
Bilateral credit agreement with banks 3.2 3.2 fixed / variable 2015
Bilateral credit agreement with banks 200.0 200.0 variable 2019
Various bank credit lines 11,544.8 64.2 fixed / variable > 2 years
13,748.0 267.4
The Group has a €2 billion multi- currency revolving credit facil-
ity, which was renewed in fiscal 2014 (“Syndicated Loan 2013”).
The credit line was underwritten by an international group of
banks and has a remaining term until March 2019, with an
extension option of one year that the Group can exercise at its
own discretion. This credit line had not been utilized as of the
reporting date.
On September 22, 2014 the Group arranged credit lines
amounting to US$15.6 billion with a banking consortium to secure
the expected purchase price payment for the planned acquisition
of the Sigma- Aldrich Corporation, USA (Sigma-Aldrich). As of the
balance sheet date, the nominal volume of these credit lines was
US$13.1 billion since a portion of the original nominal amount
had already been replaced by other financial resources. A signifi-
cant portion of the credit line is to be replaced by other capital
market instruments by the time the acquisition closes. As of
December 31, 2014, the described credit lines for financing the
planned acquisition represent the vast majority of the existing
bank lines amounting to €11,544.8 million (2013: € 245.0 million).
Furthermore, the Group had access to a commercial paper program
with a volume of €2 billion to meet short-term capital require-
ments, which had not been utilized as of the reporting date.
In October 2014, the Group renewed its debt issuance pro
gram
with a volume of €15 billion. The debt issuance program
forms
a flexible contractual basis for issuing bonds.
In December 2014, the Group issued a subordinate hybrid
bond with a two-tranche structure. This issuance is part of the
financing of the proposed acquisition of Sigma-Aldrich. Both
tranches have a maturity of 60 years. The first tranche with a
nominal volume of €1.0 billion pays a coupon of 2.625 % and
contains an early bond redemption option for Merck KGaA,
Darmstadt, Germany, after 6.5 years. The second tranche, with a
nominal volume of €500 million and carrying coupon of 3.375 %,
includes an early redemption right for the Group after ten years.
The two rating agencies Standard & Poor’s and Moody’s have
given equity credit treatment to half of the issuance, thus making
the issuance more favorable to the Group’s credit rating than a
classic bond issue. The bond is recognized in full as a financial
liability in the balance sheet.