Annual Report 2009 - Greentown China Holdings Limited

Notes to the Consolidated Financial Statements
For The Year Ended 31 December 2009
29. SENIOR NOTES (Continued)
At any time and from time to time on or after 8 November 2010, the Company may redeem the senior notes,
in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus
accrued and unpaid interest to the redemption date if redeemed during the twelve-month period beginning on 8
November of each of the years indicated below.
Period
Redemption price
2010 104.50%
2011 102.25%
2012 and thereafter 100.00%
At any time prior to 8 November 2010, the Company may at its option redeem the senior notes, in whole but
not in part, at a redemption price equal to 100% of the principal amount of the senior notes plus the Applicable
Premium (as defined below) as of, and accrued and unpaid interest, if any, to the redemption date.
“Applicable Premium” means with respect to the senior notes at any redemption date, the greater of (1) 1.00%
of the principal amount of such senior notes and (2) the excess of (A) the present value at such redemption date
of (i) the redemption price of such senior notes on 8 November 2010 plus (ii) all required remaining scheduled
interest payments due on such senior notes through 8 November 2010 (but excluding accrued and unpaid
interest to such redemption date), computed using a discount rate equal to the Adjusted Treasury Rate, the rate
per annum equal to the semi-annual equivalent yield in maturity of the comparable US Treasury security, plus
100 basis points, over (B) the principal amount of such senior notes on such redemption date.
At any time and from time to time prior to 8 November 2009, the Company may redeem up to 35% of the
aggregate principal amount of the senior notes at a redemption price of 109% of the principal amount of the
senior notes, plus accrued and unpaid interest, if any, with the proceeds from sales of certain kinds of its capital
stock, subject to certain conditions.
The senior notes contain a liability component and an early redemption option:
(i)
Liability component represents the present value of the contractually determined stream of future
cash flows discounted at the prevailing market interest rate at that time applicable to instruments of
comparable credit status and providing substantially the same cash flows, on the same terms, but without
the embedded derivatives.
The interest charged for the year is calculated by applying an effective interest rate of approximately 9%
per annum to the liability component since the senior notes were issued.
(ii)
Early redemption option is regarded as an embedded derivative not closely related to the host contract.
The directors consider that the fair value of the early redemption option is insignificant on initial
recognition and on 31 December 2008 and 2009.
164
Greentown China Holdings Limited Annual Report 2009