Ryanair 2010 Annual Report Download - page 96

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94
Through the use of interest rate swaps, Ryanair has effectively converted a portion of its floating-rate
debt under its financing facilities into fixed-rate debt. Approximately 45% of the loans for the aircraft acquired
under the above facilities are not covered by such swaps and have therefore remained at floating rates linked to
EURIBOR, with the interest rate exposure from these loans largely hedged by placing a similar amount of cash
on deposit at floating interest rates. The net result is that Ryanair has effectively swapped or drawn down fixed-
rate euro-denominated debt with maturities between 7 and 12 years in respect of approximately 55% of its
outstanding debt financing at March 31, 2010. 30% of this debt has been partially swapped, with the relevant
swaps covering the first 7 years of the 12-year amortizing period.
The table below illustrates the effect of swap transactions (each of which is with an established
international financial counterparty) on the profile of Ryanair’s total outstanding debt at March 31, 2010. See
“Item 11. Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Exposure and Hedging”
for additional details on the Company’s hedging transactions.
At March 31, 2010 EUR EUR
Fixed Floating
(millions)
Borrowing profile before swap transactions................................
.....
1737.9 12,218.3
Interest rate swaps – Debt swapped from floating to fixed
...............
901.7 (901.7)
Borrowing profile after swap transactions................................
........
11,639.6 11,316.6
The weighted-average interest rate on the cumulative borrowings under these facilities of 12,956.2
million at March 31, 2010 was 2.76%. Ryanair’s ability to obtain additional loans pursuant to each of the
facilities to finance the price of future Boeing 737-800 aircraft purchases is subject to the issuance of further
bank commitments and the satisfaction of various contractual conditions. These conditions include, among other
things, the execution of satisfactory documentation, the requirement that Ryanair perform all of its obligations
under the Boeing agreements and provide satisfactory security interests in the aircraft (and related assets) in
favor of the lenders and Ex-Im Bank, and that Ryanair not suffer a material adverse change in its conditions or
prospects (financial or otherwise).
Ex-Im Bank’s policy on facilities of this type is to issue a binding final commitment approximately six
months prior to delivery of each aircraft being financed. Ex-Im Bank has already issued final binding
commitments and related guarantees with respect to the 157 (net of 25 aircraft disposals) Ex-Im Bank-financed
Boeing 737-800 aircraft delivered between 1999 and March 31, 2010. Ex-Im Bank’s final binding commitment
is also subject to certain conditions set forth in the documentation for facilities and the Ex-Im Bank guarantee.
These conditions include, among other things, the execution of satisfactory documentation, the creation and
maintenance of the lease and related arrangements described below, that Ryanair provide satisfactory security
interests in the aircraft (and related assets) in favor of Ex-Im Bank and the lenders, and that the subject aircraft
be registered in Ireland, be covered by adequate insurance and maintained in a manner acceptable to Ex-Im
Bank. Ryanair expects that any future commitments or guarantees issued by Ex-Im Bank will contain similar
conditions. The terms of the facilities and the Ex-Im Bank guarantee require that Ryanair pay certain fees in
connection with such financings. In particular, these fees include arrangement fees paid to the facility arranger,
and a commitment fee based on the unutilized and non-cancelled portion of the guarantee commencing 60 days
from the date of issuance of the guarantee and payable semi-annually in arrears. An exposure fee for the
issuance of the guarantee on the date of delivery is also payable to Ex-Im Bank (based on the amount of the
guarantee). Ryanair’s payment of the applicable exposure fee to Ex-Im Bank (based on the amount of the loan
provided) is eligible for financing under the facilities. Ryanair anticipates that similar fees will be incurred as
additional aircraft are delivered and financed.
As part of its Ex-Im Bank guarantee-based financing of the Boeing 737-800s, Ryanair has entered into
certain lease agreements and related arrangements. Pursuant to these arrangements, legal title to the 157 aircraft
delivered and remaining in the fleet as of March 31, 2010 rests with a number of United States special purpose
vehicles (the “SPVs”) in which Ryanair has no equity or other interest. The SPVs are the borrowers of record
under the loans made or to be made under the facilities, with all of their obligations under the loans being
guaranteed by Ryanair Holdings.