Tiscali 2009 Annual Report Download - page 125

Tiscali Group: Annual Report 2009
124
Several general covenants where also defined to limit certain extraordinary transactions such as the disposal
of important assets, transfer of property, intercompany payments over a certain threshold, payment of
dividends.
The loan agreement provides for events of default, which is common practice for this type of agreement,
where the senior financial institutions can apply an acceleration clause for repayment. Among these is
default on certain contract obligations, namely the financial and operational covenants and payment of
full amounts according to the payment schedule. In addition, the Group Facility Agreement provides as an
event of default any litigation whose negative outcome might have a significant impact on the Group to such
a degree that it would place doubts on its ability to survive or fulfil its obligations as laid down in the loan
agreement (“Material Adverse Effect”).
As at today’s date, also with regard to the factors described in the section “Disputes, contingent liabilities
and commitments”, which should be referred to for details and assessment of the possible impact of
disputes and contingent liabilities, there have been no events or circumstances that would be considered
an “event of default” as defined in the Group Facility Agreement.
The Business Plan over the entire timeframe provides for respecting the covenants and contract obligations
as laid down in the Group Facility Agreement, whose limits can be overcome when the plan is updated.
According to the Group Facility Agreement and agreements reached with the financial institutions, Tiscali
has also undertaken to present an extension to the 2009-2013 plan until 2017, certified pursuant to art. 67
of Royal Decree 267/1942.
With regard to the guarantees, the parent company Tiscali S.p.A. and subsidiaries Tiscali Italia S.p.A.,
Tiscali International BV and Tiscali Financial Services SA are the entities that provided them under the loan
agreement. It should also be mentioned that the guarantee given by the subsidiary Tiscali Italia S.p.A. is
limited to EUR 110 million.
The amortization plan provided by the GFA provides for payment of Facility A, B and C for 85% directly on
expiry. The interest rate set by the agreement is at a fixed rate and goes up in phases until maturity. A portion
of the interest is to be paid in cash according to preset deadlines while the remaining portion is capitalized
on the loan and paid off on expiry of each tranche (“PIK” interest).
It should be remembered that the debt with Senior Lenders until 3 July 2009, when the debt was completely
restructured, was composed of the following:
1) Senior Secured Bridge Facility Agreement, EUR 400 million;
2) Credit Facility, EUR 49 million;
3) Revolving Credit Facility, EUR 50 million.
It should also be remembered that under the policies for managing exchange rate risk, the Group stipulated
a SWAP agreement with the financial institutions. At 3 July 2009, it had a negative fair value amounting to
EUR 16 million and it was completely paid off under the debt restructuring transaction.