CORRAL PETROLEUM HOLDINGS AB (PUBL) - Preem

Cash flow used in investment activities in 2009 was SEK 619 million, a decrease of SEK 147 million, comparedto SEK 766 million for 2008. The investment activities are primarily related to maintenance and upgrades at ourrefineries in Lysekil and Gothenburg, and to some extent at our stations in our marketing division.Cash flow used in financing activities was SEK 1,019 million in 2009, a decrease of SEK 2,320 million,compared to cash flow from financing activities of SEK 1,301 million for 2008, as a consequence of a higher cash flowgenerated from operations in 2009 compared to 2008, borrowings could be repaid instead of being increased. Equitycontribution received amounted to SEK 153 million in 2009 compared to no contribution received in 2008. The equitycontributions in 2009 correspond to payments of interest expense for the bond loans in April 15, July 15 and October 15.Future capital needs and resources and capital expendituresAs a holding company, we are dependent upon equity contributions from our parent company, MoronchaHoldings, or its shareholder, dividends, permitted repayment of intercompany debt, if any, and other transfers of fundsfrom Preem. See “—Restrictions on transfers of funds” and “Risk Factors—Risks related to our Business—We are aholding company with no revenue generating operations of our own. We depend on the ability of our subsidiaries andour shareholder to distribute cash to us.”As of December 31, 2010, we had approximately SEK 504 million in operating lease obligations. We continueto review opportunities for improving our refineries where returns on investment would justify these improvements. Anysuch investments could require considerable capital investment. We intend to fund these expenditures from equitycontributions from our parent company, Moroncha Holdings, or its shareholder, available cash reserves, internallygenerated cash flow from operating activities and amounts available under our unutilized credit facilities.We made capital expenditures of SEK 641 million (€71 million) for the year ended December 31, 2009,compared with SEK 726 million (€81 million) for the year ended December 31, 2008. For the year ended December 31,2010, we made capital expenditures of SEK 710 million (€79 million), an increase of approximately 11% from the yearended December 31, 2009. These expenditures were funded from available cash reserves, internally generated cash flowfrom operating activities and long-term debt. Most of our capital expenditures in 2008 at Preemraff Gothenburg andPreemraff Lysekil were related to a few medium-sized projects and a large number of small projects. The medium-sizedprojects at Preemraff Gothenburg consisted of (i) the revamp of the crude distillations units for improved yield andenergy saving, (ii) the modification of the mild hydrocracker for production of green diesel and (iii) the upgrade of thetank bunds and sewer system. Preemraff Lysekil’s medium-size projects consisted of (i) the modification of the vacuumdistillation unit for increased yield and (ii) the installation of low nitrogen oxide burners in the visbreaker heaters. In2010, capital expenditures focused primarily on maintenance and health, safety and environmental upgrades.Description of IndebtednessIndebtedness. As of December 31, 2010, we had total consolidated indebtedness (consisting of total long-termdebt and total current debt) of SEK 14,630 million (€1,625 million). We also had amounts available under our unutilizedcredit facilities of SEK 1,926 million (€214 million). As of December 31, 2010, our indebtedness bore interest at aweighted average annual rate of 6.84%. As of December 31, 2009, we had total consolidated indebtedness (consisting oftotal long-term debt and total current debt) of SEK 20,227 million (€2,247 million). We also had amounts availableunder our unutilized credit facilities of SEK 1,614 million (€179 million). As of December 31, 2009, our indebtednessbore interest at a weighted average annual rate of 4,10%.In connection with the Former Corral Petroleum Holdings Acquisition, pursuant to which we acquired all of theissued and outstanding share capital of Former Corral Petroleum Holdings from Moroncha Holdings, we issued anddelivered a promissory note to Moroncha Holdings in the amount of SEK 6,500 million. On April 5, 2007, we issued€355 million aggregate principal amount of our Floating Rate Split Coupon Notes due 2010 and $350 million aggregateprincipal amount of our Floating Rate Split Coupon Notes due 2010 (collectively, the “2007 Notes”). We used proceedsfrom the offering of the 2007 Notes to partially repay the Moroncha Note (the remainder of which (approximately SEK1,407 million) was set off entirely at the closing of the offering of the 2007 Notes against an unconditional shareholder’scontribution to us by Moroncha Holdings).Pursuant to an indenture dated May 6, 2010, we exchanged the 2007 Notes for approximately €221 millionaggregate principal amount of our Varying Rate Senior Secured Notes due 2011 and approximately $250 millionaggregate principal amount of our Varying Rate Senior Secured Notes due 2011 (the “Senior Secured Notes”) andapproximately €79 million aggregate principal amount of our Varying Rate Subordinated Notes due 2015 andapproximately $35 million aggregate principal amount of our Varying Rate Subordinated Notes due 2015 (the“Subordinated Notes”). Up to and including December 31, 2010, the Senior Secured Notes bore interest in cash at arate of 2.0% per annum, plus additional interest which was payable at our option either in cash at 8.5% per annum orthrough the issuance of additional senior secured notes at 10.5% per annum in a principal amount equal to such interestamount. From January 1, 2011, the Senior Secured Notes bore interest in cash at a rate of 2.0% per annum, plusadditional interest which is payable at our option either in cash at 11.0% per annum or through the issuance of additionalsecured notes at 13.0% per annum in a principal amount equal to such interest amount. For at least as long as any27