Individual commitments under share-based payments enable the Company to link certain components of compensation to its share price or the latter’s change over time. Conergy therefore maintains a share-based payment system for members of its Management Board based on stock appreciation rights (SARs) on shares of Conergy AG. The share-based payment programme based on stock appreciation rights constitutes a cash-settled share-based payment transaction as defined in IFRS 2.
Members of the Management Board participate in a share-based payment programme based on stock appreciation rights that is integral to each Management Board member’s variable compensation. An individual percentage of the annual variable compensation (target amount) provides the basis for measuring the stock appreciation rights. The number of phantom stock op- tions is determined based on the weighted average price of the Company’s share on the last 30 days of the financial year for which the compensation is owed. Depending on the performance of Conergy’s share price relative to a four-year performance period that starts on the issue date, an amount corresponding to
ManageMent Board and SuperviSory Board | group ManageMent report | Consolidated FinanCial statements | Further inForMation
no more than 250 percent of the target amount is paid to the participants upon the programme’s expiry; the measurement is based on the weighted average share price during the 30 trading days preceding the pay- ment date.
The stock option programmes for certain members of the Management Board lapsed because the respective director’s contracts expired. Expenses of TEUR 251 (previous year: expenses of TEUR 56) were recognised under personnel expenses in connection with this stock option programme for the financial year just ended. A liability of TEUR 295 (previous year: TEUR 44) was recognised for the share-based payments as at 31 December 2012.
27. Borrowings
Borrowing are comprised as follows:
eur million total up to 1 year 1 to 5 years more than 5 years as at 31.12.2012 Liabilities to banks 124.6 54.4 70.2 – Derivative financial instruments – – – – Other borrowings 11.7 0.6 – 11.1 total 136.3 55.0 70.2 11.1 as at 31.12.2011 Liabilities to banks 124.9 53.1 71.8 – Derivative financial instruments – – – – Other borrowings 16.4 0.5 – 15.9 total 141.3 53.6 71.8 15.9
To secure the Conergy Group’s liquidity in the future, the new syndicated loan agreement (2011 Syndicated Loan Agreement) took effect after the capital increase was recorded in the Commercial Register on 21 July 2011, replacing the 2007 Syndicated Loan Agreement after the loans thereunder had been repaid. Conergy AG and Conergy SolarModule GmbH & Co. KG acting as borrowers, as well as other significant companies of the Conergy Group acting as guarantors, and ten banks led by Commerzbank International S.A., Luxembourg, closed this new loan agreement for EUR 261.5 million on 8 July 2011.
The scope of the collateral for the 2011 Syndicated Loan Agreement is basically identical to that for the 2007 Syndicated Loan Agreement. As is customary for such funding arrangements, the collateral made available for the 2007 Syndicated Loan Agreement was released and new collateral was created for the loan agreement dated 8 July 2011. In particular, the 2011 Syndicated Loan Agreement thus has been collateralised by pledging absolutely all equity interests in Conergy Deutschland GmbH, Mounting Systems GmbH, Conergy SolarModule GmbH & Co. KG, Conergy SolarModule Verwaltungs GmbH, Conergy Services GmbH, Conergy Real Estate Verwaltungs GmbH, Conergy Real Estate GmbH & Co. KG, Momentum Renewables GmbH (formerly: Epuron GmbH), Conergy Inc. (USA) and Conergy Projects Inc. (USA) as well as Conergy Pty. Ltd. (Australia). Conergy has also created senior collateral in favour of the lenders based on all of its material assets or conveyed, pledged or assigned them for security purposes to an entity holding the collateral.
Of the three-tranche 2011 Syndicated Loan Agree- ment, Tranche A in the amount of EUR 70.2 million will serve to fund existing liabilities under the 2007 Syndi- cated Loan Agreement; Tranche B provides a revolving facility of EUR 50.0 million and covers the Conergy Group’s working capital requirements as well as other defined operating purposes; Tranche C in the amount of EUR 141.3 million finally serves to fund existing guarantees and cover additional guarantees as re- quired. Whilst all tranches are due and must be repaid in full four years from initial drawdown, revolving loans utilised under Tranche B must either be repaid at the end of the respective interest period or allocated to a new interest period without having been repaid and newly granted; they may then be used until one month prior to final maturity.
The individual tranches of the 2011 Syndicated Loan Agreement are subject to interest at a variable rate corresponding to the sum of the applicable margin, EURIBOR (or LIBOR in case of a foreign currency) for the interest period selected and the regulatory costs (in each case as defined in the loan agreement). The 2011 Syndicated Loan Agreement provides for a mark- up of 1 percent per annum if Conergy AG, Conergy SolarModule GmbH & Co. KG or a guarantor under the 2011 Syndicated Loan Agreement fail to repay an amount due and payable in due time.
Unless any of the exceptions set out in the 2011 Syndicated Loan Agreement intervene, Conergy is obligated – if it borrows funds on the capital market, sells assets and receives insurance payments – to use
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the net proceeds for early repayment of both interest and costs outstanding first; if neither interest nor costs are owed, such net proceeds must be used to repay Tranche A and, once it has been repaid in full, Tranche B. The 2011 Syndicated Loan Agreement also contains customary provisions regarding both voluntary and mandatory special loan payments.
Due to the sale of voltwerk electronics GmbH to the Bosch Group during 2012, Conergy AG was required in December 2012 to make an unscheduled repayment to the banks from the proceeds of the sale of voltwerk electronics GmbH in accordance with the provisions of the loan agreement.
Tranche C, which is available for the refinancing of guarantees, continued to exist in the same amount throughout 2012.
The 2011 Syndicated Loan Agreement contains re- quirements that have an impact on the Conergy Group’s ability to exercise discretion in operational terms. Certain requirements do apply during the term of the agreement. Among other things, these require- ments crimp the ability of the Conergy Group to provide assets as collateral, sell assets, participate in joint ventures, acquire additional companies or business units, incur additional financial liabilities, make loans, provide guarantees, incur leasing liabilities or under- take specific restructuring measures. Any noncompli- ance with these stipulations triggers an extraordinary right of termination on the lenders’ part (in some cases after expiry of a cure period), giving them the right to call the loan immediately.
The lenders have other rights to terminate, for example, if covenants stipulated provided under the 2011 Syndicated Loan Agreement are not (or cannot be) truthful, if a German or significant foreign subsidiary files for insolvency, if creditors institute execution pro- ceedings against Conergy for an amount in excess of EUR 5.0 million in each individual case, if Group com- panies whose total financial liabilities are EUR 5.0 million or more default, or if creditors of such financial liabilities are entitled to call these liabilities early due to the occurrence of a right to terminate. Conergy AG and other Group companies may declare a dividend only if a predefined level of liabilities was met in the calendar quarter immediately preceding the date of the envi- sioned distribution. Moreover no creditor is obligated to satisfy a demand for payment by a borrower in the event of a change of control. In certain circumstances, the creditors have the right to terminate the loan agree- ment for cause, such right to be exercised by each
bank individually. The aforementioned rights shall inure to the creditors during the first three years from the first drawdown under the loan agreement if they are en- joined, due to either corporate requirements internal to the given entity or regulatory requirements, from serving as a creditor on account of the change of control. The loan agreement contains extensive disclosure re- quirements vis-à-vis the financing banks. The Company is also obligated to comply with certain financial cove- nants starting in 2014. These financial covenants shall be established in December 2013 by mutual agree- ment between the Company and the lenders. Absent an agreement, the financial covenants shall be based on the Company’s targets until 2014 less risk discounts. Any breach of the financial covenants that apply from 2014 may give the banks the right to call the tranches of the loan.