Our performance in 2009 - Sappi

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20. Interest-bearing borrowings continued Currency Secured loans continued State Street Bank State Street Bank Österreichische Kontrollbank Österreichische Kontrollbank Capitalised leases Interest rate (8) Principal amount outstanding Balance sheet value US$ Variable US$61 million US$61 million Trade receivables US$ Variable US$67 million US$67 million Trade receivables Security/ cession Expiry EUR Fixed EUR400 million EUR386 million (2,6) Property, plant and equipment, intercompany receivables and shares in subsidiaries US$ Fixed US$38 million US$38 million (2,6) Property, plant and equipment, intercompany receivables and shares in subsidiaries 2009 annual report Revolving facility Revolving facility Financial covenants 143 EBITDA to net interest and net debt to EBITDA (5) EBITDA to net interest and net debt to EBITDA (5) April 2014 EBITDA to net interest and net debt to EBITDA (5) June 2010 EBITDA to net interest and net debt to EBITDA (5) Fortum EUR Variable EUR29 million EUR29 million Unsecured November 2012 No financial covenants Molsindra EUR Fixed EUR5 million EUR5 million Coating machine Rand Merchant Bank Unsecured bank term loans Österreichische Kontrollbank January 2010 No financial covenants ZAR Fixed ZAR160 million ZAR160 million (1) Buildings September 2015 No financial covenants EUR Variable EUR58 million EUR58 million (1) December 2009 No financial covenants ABN AMRO US$ Fixed US$20 million US$20 million June 2010 No financial covenants Nedbank ZAR Fixed ZAR349 million ZAR349 million (1) January 2011 No financial covenants Nedbank ZAR Fixed ZAR479 million ZAR479 million March 2014 Gearing ratio/ interest and dividend cover Commerzbank ZAR Fixed ZAR149 million ZAR149 million (1) March 2010 No financial covenants Calyon ZAR Variable ZAR11 million ZAR11 million (1,4) October 2009 EBITDA to net interest and net debt to EBITDA (5) PSG ZAR Fixed ZAR12 million ZAR12 million (1) June 2014 No financial covenants RZB Bank EUR Fixed EUR3 million EUR3 million December 2009 No financial covenants financials
144 Notes to the group annual financial statements continued 20. Interest-bearing borrowings continued The analysis of the currency per debt is: Local currency million US$ million US$ 1,342 1,342 EUR 986 1,448 ZAR 3,981 537 (1) The value outstanding equals the total facility available. (2) In terms of the agreement, limitations exist on liens, sale and leaseback transactions and mergers and consolidation. Sappi Limited must maintain a majority holding in Sappi Papier Holding GmbH group. (3) Sappi Papier Holding GmbH, Sappi Limited or Sappi International SA may at any time redeem the June 2012 and 2032 public bonds (the ‘Securities’) in whole or in part at a redemption price equal to the greater of (i) 100% of the principal amount of the Securities to be redeemed and (ii) a make-whole amount based upon the present values of remaining payments at a rate based upon yields of specified US treasury securities plus 25 basis points, with respect to the 2012 Securities, and 30 basis points, with respect to the 2032 Securities, together with, in each case, accrued interest on the principal amount of the securities to be redeemed to the date of redemption. (4) The financial covenant relates to the financial position of Sappi Manufacturing, a wholly-owned subsidiary of Sappi Limited. (5) Financial covenants relate to the Sappi Limited group. (6) The principal value of the loans/bonds corresponds to the amount of the facility, however, the outstanding amount has been adjusted by the discounts paid upfront and the fair value adjustments relating to hedge accounting. (7) US$ fixed rates have been swapped into Euro fixed rates. These swaps are subject to hedge accounting in order to reduce as far as possible the foreign exchange exposure. (8) The nature of the rates for the group bonds is explained in note 30 to the financial statements. The nature of the interest rates is determined with reference to the underlying economic hedging instrument. A detailed reconciliation of total interest-bearing borrowings has been performed in note 30. Other restrictions As is the norm for bank loan debts, a portion of Sappi Limited’s financial indebtedness is subject to cross default provisions. Breaches in bank covenants in certain subsidiaries, if not corrected in time, might result in a default in group debt, and in this case, a portion of Sappi Limited consolidated liabilities might eventually become payable on demand. During fiscal 2009 and 2008, we were in compliance with the financial covenants relating to the material loans payable. Regular monitoring of compliance with applicable covenants occurs. If there is a possible breach of a financial covenant in the future, negotiations are commenced with the applicable institutions before such breach occurs. Borrowing facilities secured by trade receivables The group undertakes several trade receivable securitisation programmes due to the cost-effectiveness of such structures. These structures, with the exception of the South African scheme, are treated as on balance sheet, with a corresponding liability (external loan) being recognised and corresponding interest is recognised as finance cost. The trade receivables are legally transferred, however, most of the market risk (foreign exchange risk and interest rate risk) and the credit risk is retained by Sappi. As a consequence, based on the risks and rewards evaluation, these securitisations do not qualify for derecognition under IAS 39. Further detail of the value of trade receivables pledged as security for these loans is included in note 16 of the financial statements. Sappi Fine Paper North America Sappi sells the majority of its US$ receivables to Galleon Capital LLC on a non-recourse basis. Credit enhancement includes a 3% deferred purchase price plus a letter of credit in the amount of US$18 million that relates to the uninsured portion of those obligors with concentrations above 3% (Sappi, as servicer of the receivables, is responsible for the collection of all amounts that are due from the customer). The rate of discounting charged on the receivables is LIBOR (London Interbank Offered Rate) plus a margin for receivables to customers located in OECD countries. 3,327
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SAPPI GROUP (Sappi Limited) ANNUAL
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• the impact of future investment
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Our reporting strategy As a leading
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1 2 North America 2 4 1 San Francis
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4 Our performance in 2009 Financial
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6 Our performance against financial
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8 Our performance against sustainab
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10 Our performance against sustaina
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12 Our performance against sustaina
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14 Our sustainable business cycle T
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16 Our products 1 2 3 Coated paper
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Our objectives for 2010 Improve pro
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20 Letter to shareholders continued
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22 Letter to shareholders continued
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24 Interview with Ralph Boëttger,
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26 Our leadership Independent non-e
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28 Our leadership continued Indepen
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30 Review of operations Sappi Fine
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32 Review of operations | Sappi Fin
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34 Review of operations | Sappi Fin
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36 Review of operations Sappi Fores
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38 Review of operations | Sappi For
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40 Value added statement for the ye
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42 Chief financial officer’s repo
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62 Five-year review for the year en
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64 Share statistics at September 20
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Risk management Global economic con
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Risk philosophy The Sappi Limited b
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Independence Accountability Given t
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Fairness Social responsibility Lege
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2009 annual report 75 Induction and
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2009 annual report 77 employment of
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2009 annual report 79 board to esta
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As part of continuous improvement t
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Compensation report In 2009, the co
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Balance between fixed and variable
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Executive directors (1) Details of
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2009 annual report 89 R J Boëttger
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2009 annual report 91 Board Committ
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Page 126 and 127: 2009 annual report US$ million 2009
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Page 152 and 153: 22. Provisions continued September
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Company auditor’s report for the
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Condensed Sappi Limited company bal
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2009 annual report Notes to the con
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Glossary General definitions bleach
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not be comparable with similarly ti
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No issue and/or sale of these share
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Notes Confirmation of appointment o
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Proxy form for annual general meeti
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forward-looking statements Certain
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Our performance in 2009 - Sappi

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