notes to the financial statements - Far East Orchard Limited

NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2008
25. Borrowings (continued)
(b) Secured liabilities (continued)
The Bonds and Notes are secured on:
(i) a first legal mortgage over a hotel property and the freehold land thereon;
(ii) a legal assignment of the rights, title and interest under or arising out of any sale agreements, lease
agreements, insurances, revenue collection account, performance bonds and any other cash flows arising
from the property; and
(iii) comprehensive insurance of the property, naming the trustee as beneficiary.
The Bonds and Notes rank pari passu as a single class without any preference or priority among themselves but
rank senior to all other present and future unsecured obligations (including subordinated obligations and priorities
created by law or the trust deed) of the Company from time to time outstanding.
In the event of an amalgamation, reconstruction or merger of the Company and/or the Company and its
subsidiaries occurring on or after the third year, the Company shall have the option to redeem all the Bonds
and the Notes at a specified premium and on specified interest payment dates. Similarly, the Bondholders and
Noteholders have an option to sell the Bonds and Notes back to the Company if following such event, the
Company’s majority shareholder holds less than 33% interest in the Company.
(c) Interest rate risks
The weighted average effective interest rates of total borrowings at the balance sheet date were as follows:
The Group The Company
2008 2007 2008 2007
% % % %
Loans from banks/financial institutions 2.37 3.16 4.00 3.22
Medium Term Notes 2.87 3.10 2.87 3.10
Bonds and Notes 3.59 4.28 3.59 4.28
ORCHARD PARADE HOLDINGS LIMITED ANNUAL REPORT 2008 65