Financial Statements - Geberit

13. Financial instruments
note holder who responded affirmatively to the consent solicitation on or
prior to 1 June 1999. Between 30 June 1999 and 31 December 1999, the
Group purchased in cash another mdem 1.14 principal of the Senior Notes
at a blended price of 113.7%. The Junior Notes, which were issued to members
of the Gebert family in connection with the Leveraged-buyout, were
purchased at par plus accrued interest at a total amount of mdem 191.1
(mchf 156.9). Costs associated with the refinancing of the Old Senior Facilities,
the redemption of the Senior Notes and the repurchase of the Junior
Notes, including premiums paid, tender costs and other fees of mchf 21.7,
and the write-off of the remaining deferred financing fees attributable to
the refinanced or repaid debt of mchf 14.3 are recorded as debt extinguishment
costs in the consolidated income statement.
Borrowings under the Senior Facilities are secured by guarantees from
Geberit ag, Geberit Holding ag and Geberit Beteiligungs GmbH & Co. kg,
and contain a number of covenants and conditions typical to senior financing,
including among others the achievement of certain financial targets
and ratios.
Where necessary under the risk management policy, the Group enters into
derivative financial instruments to hedge its exposure to foreign currency
exchange rate risk and interest rate risk. The risk management policy and
the accounting policies for the Group’s derivative financial instruments are
disclosed in Note 3. At 31 December 2000 and 1999, the following derivative
financial instruments were outstanding:
Foreign currency exchange rate instruments
The Group hedges a portion of the foreign currency exchange rate risk associated
with its long-term debt denominated in Euro principally with purchased
foreign currency options (in Deutsche mark). No net premium was paid
or received in connection with these options. The options are designed to
(i) lock-in a portion of unrealised currency translation gains earned through
31 December 1997 and (ii) to collar future exchange rate movements on the
debt within designated exchange rate bands. The options expire in February
2002, but can be sold by the Group at fair market value at an earlier date.
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