CORRAL PETROLEUM HOLDINGS AB (PUBL) - Preem

funded. The unfunded benefit pension plan amounts to approximately SEK 115 million in respect of former, and to someextent, current employees. We pay approximately SEK 10 million per year, which has an impact on our cash and cashequivalents. The actuarial valuation, which is conducted annually according to IAS 19, shows approximately the samevalue. We also have a non-active funded defined benefit pension plan in respect of current and former employees. Theactuarial valuation, which is conducted annually in accordance with IAS 19, resulted in a positive value on ourconsolidated balance sheet for the year ended December 31, 2010. However, our net liabilities under the pension plansmay be significantly affected by changes in the expected return on the plans’ assets, the rate of increase in salaries andpension contributions, changes in demographic variables or other events and circumstances. Changes to local legislationand regulation relating to pension plan funding requirements may result in significant deviations in the timing and size ofthe expected cash contributions under such plans. On May 27, 2010, we executed a guarantee for Preem’s obligationsunder the defined pension plan to the insurance company that insures the unfunded amounts. There can be no assurancethat we will not incur liabilities relating to our pension plans, and these additional liabilities could have a materialadverse effect on our business, results of operations and financial condition.Terrorist attacks and threats of war and actual conflict may negatively impact our business.Terrorist attacks, events occurring in response to terrorist attacks, rumors, threats of war and actual conflict mayadversely impact our suppliers, our customers and oil markets generally and disrupt our operations. As a result, therecould be delays or losses in the delivery of supplies and raw materials to us, decreased sales of our products and delays inour customers’ payment of our accounts receivable. Energy-related assets, including oil refineries like ours, may be atgreater risk of terrorist attack than other targets. It is possible that occurrences of terrorist attacks or the threat of war oractual conflict could result in government-imposed price controls. These occurrences could have an adverse impact onenergy prices, including prices for our products, which could drive down demand for our products. In addition,disruption or significant increases in energy prices could result in government-imposed price controls. Any or acombination of these occurrences could have a material adverse effect on our business, financial condition and results ofoperations.Risks related to the Senior Secured Notes and our Capital StructureThe Senior Secured Notes are structurally subordinated to our subsidiaries’ debt and other liabilities.As of December 31, 2010, we had total consolidated debt (consisting of long-term debt and total current debt) ofSEK 14,630 million (€1,625 million), of which SEK 9,671 million (€1,074 million) was borrowed by wholly ownedsubsidiaries. Substantially all of this debt matures on September 17, 2011, which precedes the maturity of the SeniorSecured Notes. Generally, creditors of a subsidiary will have a claim on the assets and earnings of that subsidiarysuperior to that of creditors of its parent company, except to the extent that the claims of the parent’s creditors areguaranteed by a subsidiary. None of Preem or any of our other subsidiaries guarantees the Senior Secured Notes. TheSenior Secured Notes are structurally subordinated in right of payment to the existing and future debt and other liabilitiesof Preem and each of our other subsidiaries.In the event of any bankruptcy, liquidation or reorganization or similar proceeding relating to any of oursubsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment of their claimsfrom the assets of those subsidiaries before any assets are made available for distribution to us. The Senior SecuredNotes, therefore, are structurally subordinated to existing and future creditors of all our direct and indirect subsidiaries.The 2008 Credit Facility is secured by a pledge in respect of certain assets of Preem.Our obligations under the 2008 Credit Facility are secured by pledges over Preem’s inventory, receivables andPreem’s refineries. The lenders may enforce their existing security upon an event of default under the 2008 CreditFacility. See “Description of Certain Indebtedness—2008 Credit Facility—Restrictions on use of Cash.” In such a case,Preem may be unable to operate its business.The Senior Secured Notes and the 2008 Credit Facility contain a number of restrictive covenants, which may notallow us to repay or repurchase the Senior Secured Notes.Our ability to comply with the restrictive covenants set forth in the Senior Secured Indenture governing theSenior Secured Notes, and the restrictive covenants set forth in the 2008 Credit Facility, may be affected by eventsbeyond our control and we may not be able to meet these obligations. A breach of any of these covenants could result ina default under the Senior Secured Indenture or the 2008 Credit Facility and, potentially, an acceleration of ourobligations to repay the Senior Secured Notes or amounts outstanding under the 2008 Credit Facility, and we may nothave sufficient funds to repay such amounts, including the Senior Secured Notes.If we experience a Change of Control, as defined in the Senior Secured Indenture, each holder of the SeniorSecured Notes may require us to repurchase all or a portion of that holder’s Senior Secured Notes. At maturity, or if aChange of Control occurs, we may not have the funds to fulfill our obligations and may not be able to arrange foradditional financing. If the maturity date or Change of Control or other obligation to offer to purchase the SeniorSecured Notes occurs at a time when other arrangements prohibit us from repaying or repurchasing the Senior Secured8