Tiscali 2003 Annual Report Download - page 83

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8585
Bonds
This item, totalling EUR 540.7 million, includes the following:
The remaining portion of the bond issued by Tiscali UK Holdings Plc relates to financing for the acquisition of Telinco UK.
Important bond clauses
- Equity-linked bonds 2006
The equity-linked bond issue maturing in 2006 involves a convertible bond, issued at a price of EUR 7.57, with a soft mandatory
clause. This means that the issuer may assign shares, even where, at maturity, Tiscali’s market price is lower than the conversion
price. 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 conversion were to take place at Tiscali’s market price on 30 December 2003 (EUR 5.54), based on a fixed con-
version 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 settling the nominal debt of EUR 209.5 million. The loan will be convertible from September 2004.
- Covenant on bonds maturing in 2004 and 2005
The bonds maturing in 2004 and 2005 include a covenant linked to the Company’s gross debt and consolidated shareholders’
equity at 31 December each year. The two types of covenant are set out in the table below. The covenant applying to Tiscali in
relation to 2004 (negative consolidated cash flow) is listed first.
Given consolidated shareholders’ equity of EUR 425.6 million and consolidated gross debt of EUR 655.7 million at end-2003
(and negative consolidated cash flow), the ratio is 1.5x, and therefore lower than the limit of 2x imposed by the covenant.
The Telinco bond is recorded under short-term payables and is redeemable on request, with the option to renew. At 31 December
2003 the debt remaining was EUR 882,000.
Coupons have been set at 3-month Euribor plus a spread. Swap contracts have been entered into to hedge against interest
rate risk.
ISSUER NOMINAL VALUE ISSUE DATE COUPON MATURITY GUARANTOR
(EUR MILLION)
Tiscali Finance S.A. 80.3* July 2002 6.375% July 2004 Tiscali S.p.A.
Tiscali Finance S.A. 250 July 2000 Euribor + 3.25% July 2005 Tiscali S.p.A.
Tiscali Finance S.A. 209.5 September 2003 4.25% September 2006 Tiscali S.p.A.
Tiscali UK Holdings Plc 0.9 On request Tiscali International BV
Total 540.7
* Original issue value: EUR 150 million. Amount remaining following the buyback operation carried out in December 2003
COVENANT CONSOLIDATED COVENANT
CALCULATION PERIOD CASH FLOWS
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