Tiscali 2007 Annual Report Download - page 95

The loan also envisages positive and negative type commitments
(so-called general covenants), usual in this type of funding, includ-
ing the following which are of significance: the limits placed on
the further financial indebtedness of the Tiscali Group, the dis-
bursement of dividends, the concession of secured guarantees
and the extraordinary activities, such as acquisitions and dispos-
als. The afore-mentioned limits are such that they do not involve
significant restrictions to the Group’s ordinary operations. The
financing agreement is also aided by a pledge on the shares of
Tiscali Group subsidiaries and in relation to the Tiscali brand
name.
Failure to observe the above-mentioned Covenants would, in sub-
stance, provide the lender with the option to request early set-
tlement of the financing. Also in this case, no problems exist in
this respect.
The two bridging loans by contrast do not contain financial
covenants but only general covenants, therefore the same con-
siderations indicated above for the bank loans with IntesaSan-
Paolo and the line of liquidity apply.
The credit facility of EUR 650 million (of which EUR 600 million
disbursed as of the date of this report) essentially replaced the
previous loan with Banca Intesa SanPaolo (for EUR 280 million)
and with Barclays (for around EUR 53 million).
From the overall loan of EUR 650 million:
3EUR 150 million were repaid through the income originating
from the capital increase concluded in February 2008;
3EUR 400 million might be repaid by means of a transaction of
market debt. If the market debt transaction did not take place
within September 2008, the bridging loan would be changed into
long term payables falling due on 13 September 2014;
3Both the already disbursed credit facility of EUR 50 million
and the one made available, for another EUR 50 million, fall
due in September 2011.
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 mar-
gin with respect to the Euribor for said loan is currently estimable
in 400 base points, with the exclusion of the tranche relating
to the envisaged share capital increase. The initial margin indi-
cated will be subject to adjustment upward or downwards in
relation to the Group’s economic performance and the realiza-
tion timescales of the share capital increase transaction and
recourse to market debt instruments.
The final cost of the debt relating to the bridging loan for the
debt market transaction, amounting to EUR 400 million, will
be established at the time of completion of the market trans-
action in relation to exogenous factors such as the type of
instrument chosen and the level of market demand.
Payables to other lenders (EUR 30.1 millions) refer to the inter-
est-bearing loan granted in 2004 by the shareholders Andalas
Limited. The loan was raised to support the investments nec-
essary for supporting growth and in particular the implemen-
tation of an unbundling network infrastructure. On 13 Septem-
ber 2007, this loan was subordinated with respect to the new
loan granted by Banca Intesa SanPaolo and JP Morgan. That
loan expires on 12 March 2015 (180 days after the expiry of
the senior debt fixed on 13 September 2014).
The following table summarizes the main elements of the exist-
ing loans with Intesa San Paolo and JP Morgan
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES AT 31 DECEMBER 2007
94