Annual report 2008 - Altarea Cogedim

Benefits payable upon retirement
No provision was set aside to cover benefits payable upon
retirement, since there were no employees likely to qualify
for pension obligations at 31 December 2008.
Off-balance sheet commitments
Financial instruments
ALTAREA holds a portfolio of swaps to cover the interestrate
risk on a portion of the current and future floating rate
debt carried by itself and its subsidiaries.
2008 2007
Swaps / Total (nominal) 908,750 335,000
Income and expenses from interest-rate swaps
(€ thousand)
The fair value of the hedging instruments represented a
negative amount of €16,846 thousand at 31 December
2008.
2008 2007
Interest income 9,909 4,425
Interest expense 0 0
Premium paid (1) – 4,038 – 5,374
5,861 – 949
(1) The premiums paid during 2007 relate to preferential rate swaps for the
2008-2010 period and during 2008 termination costs concerning two swaps in
January 2009 and shown under accrued expenses.
Breakdown of swaps at 31 December (€ thousand)
2008 2009 2010 2011 2012
ALTAREA Pay the fixed rate 708,750 608,750 525,000 420,000 300,000
The reference interest rate is 3-month Euribor.
The use of derivatives as hedging instruments could expose
the Group to the risk of counterparty default. ALTAREA
mitigates this risk by using only major financial institutions
as counterparties in hedging transactions.
Commitments given
Tranche A (€266 million) of the Ixis loan is guaranteed by
unregistered mortgages on assets held by ALTAREA SCA, as
well as disposals of business receivables in respect of leases
entered into or to be entered into. In addition, the guarantees
are subject to covenants, of which the two principal criteria
are an LTV ratio of below 65% and an interest cover by
EBITDA from recurring activities ratio of over 2.0x.
ALTAREA has granted Ixis bank a pledge of shares in
SAS Foncière ALTAREA as collateral for a new Tranche B
revolving loan initially amounting to €460 million (€358
million of which was drawn down), the final instalment of
which is due to be repaid on 9 June 2013.
ALTAREA SCA has guaranteed loans to other Group companies
in an amount of €665.2 million. These commitments
primarily include a joint and several guarantee provided by
ALTAREA SCA covering Cogedim SAS to Natixis in respect
of the loan arranged for the acquisition of Cogedim in an
amount of €300 million.
The principal other commitments given by the Company
principally related to guarantees or joint and several
guarantees in an amount of €66 million.
Commitments received
For acquisitions and buyouts of minority interests, ALTAREA
secures guarantees, in particular covering potential tax
liabilities. The representations and warranties provided by
the Affine group for the sale of the controlling interest in
Imaffine on 2 September 2004 were transferred as part of
the merger, and so ALTAREA now directly holds a 10-year
guarantee covering Imaffine’s net assets before the merger.
In connection with the acquisition of Altareit, ALTAREA
received a guarantee from seller Bongrain that it would
be held fully harmless through a reduction in the selling
price from any damage or loss originating from the business
activities effectively suffered by Paul Renard with a cause or
origin predating 20 March 2008 for a period of 10 years.
Events subsequent to the balance sheet date
No material events.
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