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31 Payables to banks and medium/long- and short-term loans

 

As at 30 June 2012, medium/long-term loans of the Hera Group amounted to EUR 2,660,211 thousand (EUR 2,405,262 thousand as at 31 December 2011) and mainly comprise bond loans (EUR 2,026,384 thousand), mortgages and loans (EUR 633,827 thousand).
The change in payables, with respect to the previous year, is due to the entering of new medium/long-term loans, amounting to EUR 327.5 million, partly used for the restructuration of the Put Loan RBS of EUR 70 million and partly used to adequately finance the investment plan. In particular, a contribution was supplied in June with the granting of a IEB bank loan of EUR 125 million, to support strengthening and enlargement investments of gas and electricity distribution grids and networks, with a 15-year amortisation and a 6-month Euribor rate at 1.46% spread. It should be also noted the bond issue of EUR 102.5 million occurred on 14 May 2012 and was characterised by particularly long terms (15 and 20 years) at 5.25% fixed rate.

Medium/long-term payables to banks also include loans underwritten by subsidiaries FEA Srl and Nuova Geovis Srl, for EUR 48,900 thousand and EUR 1,781 thousand respectively. These loans are guaranteed by mortgages and special privileges for the banking pool underwriting them. The reimbursement of these loans, with final maturity term at 30 June 2019 and 30 June 2014, respectively, is contractually established in six-month instalments.

The table below shows the bonds and loans as at 30 June 2012, stated at their residual nominal value (millions of Euro), with an indication of the portion expiring within and after 5 years:

TypeResidual amount 30/06/2012Portion due within the year Portion due within 5 yearsPortion due after 5 years
Bond 1,352-500852
Convertibile bond140-140-
Puttable Bond/Loan520 - -520
Amortizing2392817239
Amortizing backed by collateral security5773317
Bullet IEB180 -180 -
Amortizing  IEB125 -22103
 Total 2,613351,0471,532

The main terms and conditions of the puttable bonds and loans are shown below:

Bond and puttable loansDuratation (years)MaturityNominal valueCouponAnnual rate
Convertibile bondLuxembourg Stock Exchange3 01/10/13140Fixed, half-yearly1.75%
EurobondLuxembourg Stock Exchange10 15/02/16500Fixed, annual4.13%
EurobondLuxembourg Stock Exchange1003/12/19500Fixed, annual4.50%
Bond (former put bond)Listed on EuroTLX Markets1317/11/20100 Fixed, half-yearly6.32%
Bond   15/20 14/05/27-34102.5Fixed, annual5.25%
Put LoanFrom 2010 the holder has the option every two years of requesting redemption at par1306/12/2070Fixed, quarterly 4.44%+CS
BondCross Currency Swap 149.8 €mln1505/08/24 20.000 JPY Fixed, half-yearly2.93%
Put Bond From 2012 the holder has the option every two years of requesting redemption at par2310/10/31250 Fixed, quarterly 4.65% +CS
Put Bond From 2011 the holder has the option every two years of requesting redemption at par2708/08/34200 Fixed, quarterly Euribor 3m -0.45%

As at 30 June 2012, outstanding bonds, equal to a nominal EUR 1,942 million, featured a fair value of EUR 2,083 million, of which EUR 653 million related to Puttable Bonds.

These transactions do not provide for financial debt covenants, apart from, on certain loans, the corporate rating limit by one rating agency only that is lower than "Investment Grade" level (BBB-).
At as 30 June, this parameter is met.

As at 30 June 2012, short term loans totalled EUR 95,705 thousand (EUR 118,467 thousand as at 31 December 2011) and include payables to banks and other lenders.

Liquidity risk

Liquidity risk consists of the impossibility to cope with the financial obligations taken on due to a lack of internal resources or an inability to find external resources at acceptable costs. Liquidity risk is mitigated by adopting policies and procedures that maximise the efficiency of management of financial resources. For the most part, this is done with the centralised management of incoming and outgoing flows (centralised treasury service); in the prospective assessment of the liquidity conditions; in obtaining adequate lines of credit; and preserving an adequate amount of liquidity.

Current cash, cash equivalents, and credit facilities, in addition to the resources generated by the operating and financing activities, are deemed more than sufficient to meet future financial needs. In particular, as at 30 June 2012, there are unused credit lines totalling more than EUR 1,000 million.

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