Tiscali 2007 Annual Report Download - page 48

The above statement was prepared on a different basis than
that presented in the explanatory notes in order to maintain
continuity with disclosure provided in previous periods and,
in particular, with respect to details provided in the explana-
tory notes, it includes VAT receivables of around EUR 13.3
million under current financial receivables and guarantee
deposits of around EUR 16.3 million under other cash equiv-
alents, as well as other minor financial receivables amount-
ing to EUR 1.2 million.
It should also be mentioned that the 2007 financial position
was defined by applying the same consolidation area existing
at 31 December 2006, i.e. including Germany, the Nether-
lands and the Czech Republic among assets held for sale.
Current bank payables include the bridging loans granted by
Intesa Sanpaolo and JPMorgan for EUR 150.2 million, repaid
in February 2008 by means of the proceeds of the share cap-
ital increase under option launched on 14 January 2008 (see
section on “Subsequent events”).
The item non-current payables includes the amount of the
loan disbursed on 13 September 2007 by Banca Intesa San-
paolo and JP Morgan, amounting to EUR 446.4 million.
The loan, amounting to a nominal EUR 650 million, of which
EUR 50 million still not used, has been recorded on the basis
of
amortized cost . The credit facility and the line of liquidity
with Intesa Sanpaolo contain financial commitments (
finan-
cial covenants
) essentially linked to the observance of the fol-
lowing financial indicators to be checked, at consolidated level,
on a quarterly basis: the ratio between the debt and the EBIT-
DA; the ratio between the EBITDA and payments by way of
principal and interest servicing the debt (Debt Service Cover
Ratio); ratio between the EBITDA and net cost for interest
(Interest Cover Ratio).
Financial covenants are assessed on a three-month basis, and
they were all respected at 31 December 2007.
In relation to the total loan of EUR 650 million:
3EUR 150 million has been repaid using the proceeds of the
share capital increase concluded in February 2008
3EUR 400 million may be repaid by means of a market debt
transaction. If the market debt transaction does not take
place by the end of September 2008, the bridging loans
will change into long-term debt maturing on 13 September
2014.
3the credit facility of EUR 50 million already disbursed, and
that made available, for a further EUR 50 million, both fall
due in September 2011.
All the loans have a floating rate linked to the Euribor and a
cost, taking into account the spreads and the commission,
which varies according to the structural features of said loan
and, therefore, the various tranches indicated previously. The
margin with respect to the Euribor is currently around 400
base points. The margin could be subject to adjustment upward
or downwards in relation to the Group’s economic perform-
ance and the realization timescales of the refinancing trans-
actions using markets instruments.
Other non-current payables (EUR 109.5 million) include EUR
30 million relating to the loan bearing interest at market rates,
disbursed during 2004 by the shareholder Andalas Limited.
The loan was raised to support the investments necessary for
supporting growth and in particular the implementation of an
unbundling network infrastructure. On 13 September 2007,
this loan was postponed by 6 months with respect to the expiry
of the new loan granted by Banca Intesa Sanpaolo and JP
Morgan.
Furthermore, the balance includes amounts due to leasing
companies for financial lease agreements (EUR 79.5 million).
The increase in leasing payables with respect to the figure at
31 December 2006 (EUR 63.5 million) is essentially attribut-
able to the sale & lease back transaction on the Sa Illetta
headquarters (Cagliari) while the residual portion concerns
the rise in lease agreements on network equipment, servers
and other equipment used directly in the production process
.
Bonds issued, totalling EUR 43.8 million, are represented by
the convertible bond subscribed by Managment&Capitali in
December 2007 for a nominal EUR 60 million at a rate of
6.75% per annum. The bond was recorded at fair value, net
of the transaction charges. The fair value (EUR 65.8 million)
was partly allocated to long-term debt (EUR 43.8 million) and
partly to an equity reserve (EUR 22 million).
The fair value of the portion of liability was calculated using
the market interest rate for an equivalent non-convertible loan.
This amount is recorded as a liability on the basis of the IFRS
amortized cost method until the conversion has finished or
maturity of the loan. The remaining portion of fair value was
allocated to the conversion option, which was included in an
equity reserve, net of the effects of income taxes.
In subsequent periods, the bond will be stated at amortised
cost and any difference is recorded under income (net of the
transaction charges), and the redemption value will be record-
ed in the income statement in the period of the loan using the
effective interest rate method.
REPORT ON OPERATIONS
47