Our performance in 2009 - Sappi

Covenants
Financial covenants apply to approximately US$588 million of our non-South African long-term
debt and our unutilised r209 million revolving credit facility. This debt is supported by a Sappi
Limited guarantee. For this reason the first two of the three covenants mentioned below are
measured on a consolidated group level. The covenants also differ from measurement period to
period, as they are set in line with the long-term forecast of group results.
Sappi Papier Holding financial covenants require that:
2009 annual report 59
(i) At the end of each quarter the mean average of the ratios of EBITDA to consolidated net
interest expense for that quarter and each of the three preceding quarters be not less than
2:1 (increasing over the term of the facility to 2.5 in July 2012);
(ii) The ratio of net debt to EBITDA be not greater than 6:1 (reducing over the term of the facility
to 4:1 in September 2012); and
(iii) With regard to Sappi Manufacturing (Pty) Limited (the holding company for South African
agents) and its subsidiaries only, the ratio of net debt to equity be not, at the end of any
quarter, greater than 0.65:1, and at the end of the full-year, the ratio of EBITDA (as defined)
to consolidated net interest paid for that period be not less than 2:1, for the period ended
September 2009.
The table below shows that as at September 2009 we were in compliance with these covenants.
US$ million Fiscal 2009 Covenant
Group covenants
Net debt to EBITDA 4.63 2.0
Sappi manufacturing covenants
Net debt to equity 43.1% 2.0
The group financial covenants also apply to the securitisation programmes with outstanding
balances of US$400 million at the end of September 2009. No Sappi Limited guarantee has
been provided for these facilities.
Dividend restriction
Under the recently concluded financing arrangements, the group is restricted from paying cash
dividends in certain circumstances – for example while the net debt to EBITDA ratio exceeds 4:1
or when the EBITDA to fixed charges (generally consolidated net interest expense) ratio is less than
2:1. In addition, any cash dividends paid may not exceed 50% of net profit, excluding special items.
Credit ratings
At the date of this annual report, our credit ratings were as follows:
Fitch South African national rating
Sappi Manufacturing (Pty) Limited
Moody’s international rating
Sappi Papier Holding GmbH
A/F1/Negative (November 2009)
(Supported by Sappi Limited guarantee) Ba3/NP/Stable (September 2009)
Secured Debt Rating Ba2 (September 2009)
Unsecured Debt Rating
Standard & Poor’s international rating
B2 (September 2009)
Corporate Credit Rating BB-/B/Stable (September 2009)
Secured Debt Rating BB (September 2009)
Unsecured Debt Rating B+ (September 2009)
In May 2009, S&P revised its rating for the group from BB to BB-, while moving the outlook from
negative to stable. This change was mainly as a result of an industry-wide re-rating of the
European Forest Products sector, sustained cost inflation, and an uncertain outlook for paper
our performance