Tiscali 2013 Annual Report Download - page 97

Annual financial report as at 31 December 2013
Date
File Name
Status
Page
-
Annual Report as at 31
December 2013
97
- Informational covenants that essentially include periodic disclosure to lenders with regard
to accounting data and forecasts reported quarterly and yearly, together with explanatory
notes from management;
- Financial covenants that will be monitored on pre-established maturities. These covenants
provide for achieving certain EBITDA levels with regard to indebtedness and the result of
financial operations as well as specific cash flow levels which will enable the Group to
honour loan repayments and instalments envisaged in the financial plan;
- Operational covenants that provide for achieving specific ARPU levels and a specific
number of customers and investments (“capital expenditure”).
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 31 December 2013, the financial covenants had not been respected and consequently, in
accordance with the reference accounting standards, steps were taken to reclassify the entire financial
debt for the GFA under current liabilities.
In this connection, please see the note “Assessment of the business as a going-concern”.
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 57.6
million;
- other financial leases for a total of Euro 0.4 million.