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Annual Report 2008 - AMG Advanced Metallurgical Group NV

Annual Report 2008 - AMG Advanced Metallurgical Group NV

Dividends No dividends

Dividends No dividends have been paid or proposed in the years ended December 31, 2008 and 2007. 22. Earnings per share Basic earnings per share Basic earnings per share amounts are calculated by dividing net profits for the year attributable to ordinary equity holders of the parent by the weighted average of ordinary shares outstanding during the year. As of December 31, 2008, the calculation of basic earnings per share is performed using the weighted average shares outstanding for 2008. As of December 31, 2007, the calculation of basic earnings per share is performed using the ordinary shares outstanding, retroactively taking into effect share splits, contributions in kind, and shares issued in accordance with the Initial Public Offering (see note 21). Diluted earnings per share Diluted earnings per share are calculated by dividing the net profit attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The only category of potentially dilutive shares at December 31, 2008 and 2007 are AMG’s share options. The diluted earnings per share calculation includes the number of shares that could have been acquired at fair value given the value attached to the outstanding options. The calculated number of shares is then compared with the number of shares that would have been issued assuming the exercise of the share options. 2008 2007 Earnings Net profit attributable to equity holders for basic and diluted earnings per share 14,453 11,704 Number of shares (in 000’s) Weighted average number of ordinary shares for basic earnings per share 26,822 26,801 Dilutive effect of share-based payments 704 517 Weighted average number of ordinary shares adjusted for effect of dilution 27,526 27,318 23. Loans and borrowings This note provides information about the contractual terms of the Company’s interest-bearing loans and borrowings. For more information about the Company’s exposure to interest rate and foreign currency risk, see notes 33 and 34. Non-current Effective interest rate Maturity 2008 2007 171,003 Term Loan EURIBOR + 1.25% 2012 91,289 94,662 $175,000 Term Loan Revolver EURIBOR + 1.25% 2012 17,000 – 110,937 GK SPK Passau 4.25%–4.90% Var 6,618 – 13,000 GK Hypovereinsbank 5.08% 2013 3,132 – 11,400 GK Landesbank 4.65% 2017 1,826 – 12,200 GFE bank loan 4.95% 2023 2,427 2,675 14,128 GfE subsidiary debt 4.05–6.50% Var 2,876 3,652 CAD250 Timminco line of credit 7.00% 2010 80 156 19,767 ALD subordinated loan 8.04% 2012 13,595 14,184 Capital lease obligations 4.74% 2010–2011 147 397 Total Non-current 138,990 115,726 Current Effective interest rate Maturity 2008 2007 110,937 GK SPK Passau 4.25–4.90% Var 949 – 13,000 GK Hypovereinsbank 5.08% 2013 835 – 11,400 GK Landesbank 4.65% 2017 122 – 11,400 GK RLB 3.95% 2008 67 – 12,200 GFE bank loan 4.95% 2023 118 112 14,128 GfE subsidiary debt 4.05–6.50% Various 538 759 1127 ALD subsidiary debt EURIBOR + 2.00% 2009 177 – Capital lease obligations 4.74% 2010–2011 215 231 Total Current 3,021 1,102 116 Notes to the Consolidated Financial Statements

Refinancing On August 30, 2007, the Company refinanced substantially all of its debt obligations by entering into a new senior credit facility agreement (the “Refinancing”). This agreement is comprised of two facilities, a $100,000 term loan facility (the “Term Loan”) and a $175,000 multicurrency revolving credit facility agreement (the “Revolving Credit Facility”). The Term Loan and the Revolving Credit Facility mature on August 30, 2012 (together the “Credit Facility”). The Credit Facility is secured by substantially all of the assets of the material subsidiaries, excluding Timminco and GK, and a 100% pledge on all of the Timminco and GK shares which are owned by the Company. Revolving Credit Facility This facility provides the Company with up to $175,000 in borrowings, which is subject to certain affirmative and negative covenants. Borrowings under the Revolving Credit Facility may be used for general corporate purposes of the Company. As of December 31, 2008, $17,000 was outstanding under the Revolving Credit Facility (2007: nil). At December 31, 2008, there was unused availability of $103,108, as $71,892 of the $175,000 is being utilized under ancillary facilities at ALD and LSM. At December 31, 2007, there was unused availability of $83,558, as $91,442 of the $175,000 is reserved for ancillary facilities at ALD and LSM. Interest on the Credit Facility is based on current LIBOR (or in the case of any loans denominated in Euros, EURIBOR) plus a 1.25 (2007: 1.50) percent margin. To mitigate risk, the Company entered into an interest rate swap to fix the interest rate on the term loan at 4.457%. The Credit Facility is subject to several affirmative and negative covenants including, but not limited to, the following: • EBITDA to Net Finance Charges: Not to be less than 3.00: 1 • Net Debt to EBITDA: Not to exceed 3.75: 1 • Senior Net Debt to EBITDA: Not to exceed 2:00:1 EBITDA, Net Finance Charges, Net Debt and Senior Net Debt are defined in the Credit Facility agreement. Mandatory prepayment of the Credit Facility is required upon the occurrence of (i) a change of control or (ii) the sale of all or substantially all of the business and/or assets of the Company whether in a single transaction or a series of related transactions. Early repayment of long-term debt With the proceeds raised from the Company’s Initial Public Offering, $168,300 of existing Senior Class A and B Notes (the “Senior Notes”) were repaid in full on August 15, 2007. In connection with the repayment of the Senior Notes, the Company incurred a loss on debt extinguishment of $33,520. This includes $22,858 of prepayment penalties, $8,264 from the write-off of the unamortized balance of the previously deferred financing costs, and $2,398 for the write-off the remaining discount on the Senior A and B Notes. In connection with the Refinancing, our UK subsidiary repaid $15,800 of remaining principal on its two $10,500 term loans with Barclays and HSBC and incurred a loss on debt extinguishment of $145, which consists of prepayment penalties and fees. Belgian and German subsidiaries, with the proceeds from the Refinancing, also terminated their credit facilities with various lenders on September 19, 2007 and repaid all outstanding borrowings as of this date. The Company also has a Subordinated Loan Agreement with HSBC Trinkhaus & Burkhardt KGaA. The principal amount of the subordinated loan is $13,595 (2007: $14,603). The subordinated loan bears interest at 7.27%. A disagio of 4.0% was applied on the subordinated loan; therefore the effective rate of interest is 8.038%. The term of the subordinated loan is unlimited. The Agreement can be terminated no earlier than August 10, 2012. A German subsidiary maintains a loan agreement with Sparkasse Nuremberg which was originated on December 1, 2003 and requires annual payments of approximately $132. This loan is also secured by land and buildings. Timminco credit facilities On April 15, 2005, Timminco entered into a Credit Agreement (the "Agreement") with Bank of America, NA. The Agreement provided for a $5,750 term loan. The Agreement contained certain change of control provisions that were violated upon Timminco’s private placement and AMG’s public offering made during 2007, requiring Timminco to terminate this facility on September 27, 2007. The term loan is not available for reborrowing. See note 25 for more details. Timminco also entered into a line of credit in 2006 valued at $204 with Elkon Products. This line of credit had $80 outstanding as of December 31, 2008 (2007: $156). GK debt A subsidiary of GK, RW maintains a government subsidised loan agreement with Bayrische Landesbank and various other loan agreements with Hypo und Verinsbank and Sparkasse Passau. The loans carry various interest rates and were recognized by the Company upon the acquisition of GK. Those with floating interest rates have been fixed through interest rates swaps. See Note 34. These loans are secured by GK’s property, plant and equipment. Debt Issuance Costs In connection with the Refinancing, the Company incurred issuance costs during 2007 which were deducted from the proceeds of the debt from the term loan. These costs Notes to the Consolidated Financial Statements 117

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