Tiscali 2003 Annual Report Download - page 35

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3636
Short-term debt increased from EUR 56.1 million to EUR 119.2 million following the inclusion of the remaining EUR 80.3 mil-
lion portion of the EUR 150 million bond, partially offset by lower bank borrowings.
Cash and cash equivalents were largely unchanged versus the previous year.
The table below details the Group’s outstanding bond issuance
Please see the Outlook section below for details of Tiscali’s plans to redeem bonds maturing in July 2004 and July 2005.
Special clauses relating to bonds
The equity-linked bond issue maturing in 2006 involves a convertible bond with a soft mandatory clause. This means that the
issuer can assign shares, even where, at maturity, Tiscali’s market price is lower than the conversion price (set at EUR 7.57 per
share). In this case, the difference between the conversion price and the market price would have to be made up by the issuer.
For example, if the market price is EUR 2 lower than the conversion price, based on a fixed conversion ratio, Tiscali would have
to give bond holders shares worth around EUR 154 million, and the difference of around EUR 55.5 million in cash, thereby sett-
ling the nominal debt of EUR 209.5 million.
The bonds maturing in 2004 and 2005 include a covenant linked to the Tiscali Group’s gross debt and consolidated sharehol-
ders’ equity as of 31 December each year. The two covenants are set out in the table below. The covenant applying to Tiscali Group
in 2004 is listed first (negative consolidated cash flow).
Given consolidated shareholders’ equity of EUR 425.6 million and consolidated gross debt of EUR 654.6 million as of
31.12.2003, the ratio is 1.5x, and therefore lower than the limit of 2x imposed by the covenant.
Investment
Group gross investment in tangible and intangible assets totalled EUR 129.6 million, or 14% of revenues. EUR 66.2 million was
invested in tangible assets in relation to the roll out and maintenance of network infrastructure, including the purchase of new
servers and routers. Most of the investment was spent in Italy and the Netherlands, and on the Tiscali international network. In
the second half of the year, investment in tangible assets related to the roll out of the infrastructure necessary to support unbund-
led ADSL services. In addition, around EUR 30 million was spent on the new technical and administrative headquarters and a
new server farm in Cagliari.
ISSUER NOMINAL VALUE (EUR MILLION) YIELD MATURITY GUARANTOR
Tiscali Finance S.A. 80.3* 6.375% July 2004 Tiscali S.p.A.
Tiscali Finance S.A. 250 Euribor + 3.25% July 2005 Tiscali S.p.A.
Tiscali Finance S.A. 209.5 4.25% September 2006 Tiscali S.p.A.
* Original issue value: EUR 150 million. Amount remaining following the buyback operation carried out in December 2003
For further information on bonds please consult the investor relations section on the website at tiscali.com
COVENANT CALCULATION PERIOD CONSOLIDATED CASH FLOW COVENANT
Annual, at 31.12 each year Negative Consolidated gross debt must not exceed the greater of:
i) EUR 600 million and ii) 2x consolidated
shareholders’ equity
Annual, at 31.12 each year Positive Consolidated net debt must not exceed the greater of:
i) 3x consolidated EBITDA, ii) EUR 600 million and
iii) 2.5x consolidated shareholders’ equity