The table below shows Block Watne Gruppen’s consolidated actual capitalisation and net indebtedness as of 31 March 2007. Amounts in NOK 1,000 Current debt Guaranteed 0 Secured 158,835 Unguaranteed / unsecured 0
Total current debt 158,835
Non-current debt Guaranteed
Secured 507,400
Unguaranteed / unsecured 95,000
Total non-current debt 602,400
Total indebtedness (A) 761,235
Share capital 9,000
Legal reserve 534,884
Other reserve 208,584
Shareholders’ equity (B) 752,468
Total capitalisation (A+B) 1,513,707
Cash 86,216
Cash equivalents 0
Trading securities 0
Liquidity (C) 86,216
Current financial receivables (D) 0
Current bank debt 158,835
Current portion of non current debt 0
Other current financial debt 0
Current financial debt (E) 158,835
Net current financial indebtedness (C + D – E) (F) 72,619
Non-current bank loans 507,400
Bonds issued 0
Other non-current loans 95,000
Non-current financial debt (G) 602,400
Net financial indebtedness (F-G) 675,019
This table above should be read together with Block Watne Gruppen’s consolidated financial statements and the related notes thereto. Since incorporation, Block Watne Gruppen has financed its operations by a combination of operating revenues, private placements and debt issues. Its cash and liquid assets and borrowings are in NOK. The financial risk management is described in Block Watne Gruppen’s annual report for 2006 (see section 11 for reference).
Indebtedness
The table below sets out the repayment schedule of Block Watne Gruppen’s consolidated debt as of 31 March 2007. Maturity Amounts in NOK 1,000 31.03.2007 2007 2008 2009 2010 2011 After 2010 Credit facility 158,835 0 0 0 0 0 0 Subordinated loan 95,000 0 0 0 0 0 0 Term loan 499,000 0 0 0 499,000 0 0 Mortgage loans 8,400 900 1,200 1,200 1,200 1,200 2,700
Total liabilities debt 761,235 900 1,200 1,200 500,200 1,200 2,700 Term loan
Block Watne Gruppen’s main financing is a term loan established in November 2005. The facility amounts to NOK 1,100 million of which NOK 601 million had been repaid as at 31 March 2007. The loan matures at year-end 2010 with NOK 499 million. The interest rate is linked to NIBOR plus a margin of 55 basis points. The key financial terms (covenants) for the term loan are:
• the ratio of the term loan to Block Watne Gruppen’s EBITDA must be less than 4.10 until the end of 2006. The required ratio is stepped down gradually to 2.40 from March 2010. The ratio is calculated quarterly based on rolling 12 month periods; and • the ratio of Block Watne Gruppen’s EBITDA to total interest cost must be higher than
3.40 until the end of 2006. The required ratio is stepped up gradually to 5.00 from year end 2009. The ratio is calculated quarterly based on rolling 12 month periods Block Watne Gruppen was as at 31 March 2007 in compliance with all these covenants. In addition to the financial covenants, the loan agreement gives the lender the right to cancel the loan agreement if Mr. Lars Nilsen reduces his ownership, directly or indirectly, to below 33% of the outstanding BWG-shares. Following the Private Placement Mr. Nilsen will own 35.7%.
Mortgage loans
The mortgage loans of NOK 8.4 million at 31 March 2007 are loans made by Block Watne AS secured with mortgages on the company’s own office buildings. Repayment of the loans is with a total of NOK 1.2 million annually as shown in the table above.
Subordinated loans
Subordinated loans comprise two loans from Lani Development AS, which is owned by CEO Lars Nilsen, to Block Watne AS. The loans amount to NOK 65 million and NOK 30 million respectively. The loans are not repaid, but can be cancelled by giving 12 months’ notice. The loans carry an annual interest rate based on the best investment rate plus one percentage point.
Credit/drawing facilities
Block Watne AS had drawn / utilized a total of NOK 158.8 million in short term credit facilities at 31 March 2007, reported as short term interest bearing debt in the balance sheet. The unutilised amount under its credit facilities at year end was approximately NOK 860 million. The credit facilities are used to finance acquisition of land and construction.
The main financial term (covenant) for the facilities is that Block Watne AS must have a ratio of shareholders’ equity and subordinated loan to total assets of more than 20%. Block Watne AS was in compliance with this covenant as of 31 March 2007.
Financing related to the acquisition of Prevesta
In connection with the acquisition of the shares in Prevesta, Block Watne’s subsidiary Husinvest I Stockholm AB has entered into a term loan agreement amounting to SEK 1,000 million. A repayment of SEK 110 million is due at year-end 2007. There are no further repayments for the first five years after the initial payment date for the loan following which the entire loan is due (however the latest repayment date is 30 June 2012). The loan is guaranteed by Block Watne Gruppen ASA.
The interest rate is linked to STIBOR plus a margin of 80 basis points. The margin is reduced to 60 basis points if the ratio of net interest bearing debt measured on a 12 month rolling basis falls below 3.75% for Block Watne Gruppen on a consolidated basis, and further down to 40 basis points if the ratio falls below 3.00. The key financial terms (covenants) for the term loan are:
• The equity ratio (defined as equity capital + subordinated loans (if any) divided by total assets) must be at least 30% in Block Watne Gruppen on a consolidated basis; and
• the ratio of the interest bearing debt to Block Watne Gruppen’s EBITDA must be less than 3.75 until the end of 2007, less than 3.5 in 2008 and less than 3.0 in 2009 and thereafter. The ratio is calculated quarterly based on rolling 12 month periods.
Pro forma capitalisation
The table below shows Block Watne Gruppen’s unaudited pro forma consolidated capitalisation and net indebtedness as of 31 March 2007.
Amounts in NOK million Current debt
Guaranteed 0
Secured 211
Unguaranteed / unsecured 0
Total current debt 211
Non-current debt Guaranteed
Secured 1510
Unguaranteed / unsecured 95
Total non-current debt 1605
Total indebtedness (A) 1,816
Share capital 13
Legal reserve 1,506
Other reserve 89
Shareholders’ equity (B) 1,609
Total capitalisation (A+B) 3424
Cash 182
Cash equivalents 0
Trading securities 0
Liquidity (C) 182
Current financial receivables (D) 0
Current bank debt 211
Current portion of non current debt 0
Other current financial debt 0
Current financial debt (E) 211
Net current financial indebtedness (C + D – E) (F) 29
Non-current bank loans 1,510
Bonds issued 0
Other non-current loans 95
Non-current financial debt (G) 1,605
This table above should be read together with the pro forma financial information presented in section 7.1 together with the related notes thereto.