Tiscali 2012 Annual Report Download - page 92

Annual financial report as at 31 December 2012
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Date File Name Status Page
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Annual Report as at 31
December 2012 92
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Several general covenants where also defined to limit certain extraordinary transactions of a particular
size, such as the disposal of important assets, transfer of ownership, 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 of all
or part of the loan. Among these is default on certain contract obligations, namely the exceeding of
the financial and operational covenants and failure to pay the amounts due according to the payment
schedule. In addition, the Group Facility Agreement envisages 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 payment 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 on the Group, there have been no events or circumstances
that would be considered an “event of default” as defined in the Group Facility Agreement.
As already illustrated, the business plan has been updated; within the sphere of this plan and for the
whole of 2013, the covenants and other contractual obligations have been observed. This 2013-2017
business plan, approved by the Board of Directors on 29 March 2013, hypothesises, as from 2014, the
rescheduling of the part of debt in excess with respect to the cash flows which is envisaged will be
generated over the plan’s duration (in detail, in July 2014, when, as indicated previously, the GFA
envisaged the repayment of a significant portion of the financial debt for a total of EUR 107.5 million,
including the portion of PIK interest capitalised for around EUR 25 million). The overall amount of the
debt falling due in 2014 and 2015, to be rescheduled, on the basis of the financial projections,
amounts to approximately Euro 135 million.
With regard to the guarantees provided, 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 provide
them under the loan agreement.
The amortisation plan established by the GFA provides for repayment of Facilities A, B and C for 85%
directly on expiry. 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 maturity of each tranche (“PIK” interest).
Payables for financial leases
The Group’s financial leases refer to agreements stipulated by the subsidiary Tiscali Italia S.p.A. and
concern:
- The “Sales & Lease Back” financial lease on the Sa Illetta property, head offices of the
company, whose debt at the date of the financial statements amounted to Euro 58 million;
- Other financial leases for a total of Euro 0.7 million.