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NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2009Note 22 Interest bearing borrowings cont.(a) Interest rate risk exposuresDetails of the consolidated entity’s exposure to interest rate changes on borrowings are set out in Note 16.(b) Convertible notesOn 24 November 2008, a note holder converted $400,000 of notes to shares.On 27 March 2009, the Company accepted offers from holders of $22,500,000 of notes to buy back the notes at a priceof 94 cents in the dollar, inclusive of 2.6 cents accrued interest. Settlement of the buy back of the convertible notes for atotal of $21,150,000 (inclusive of interest of $585,000) occurred on 31 March 2009.The outstanding balance of convertible notes on issue at 30 June 2009 was $77,100,000. Unless previously redeemed,converted, or purchased and cancelled, the notes will be redeemed on 4 June 2012 at 100% of their principal amount.Holders of the convertible notes are able to redeem all or some of the notes at the principal amount together with anyaccrued interest on the third anniversary of issue (4 June 2010). Due to this option date, the notes have been classifiedas a current liability at 30 June 2009.The convertible notes transaction costs represent bank commission, legal fees and other costs associated with the issue andare amortised over a three year period. The amortised amount was capitalised to the mines under construction and uponcompletion of development is charged to the income statement.(c) Equipment finance facilityOn 13 August 2008 the Company signed a $20,000,000 loan facility agreement with GE Commercial Finance to fund theconstruction and purchase of certain infrastructure assets at Gwalia. The facility is secured against the equipment financedand is repayable over 48 months. The interest rate is the 90 day bank bill rate plus an interest margin of 2.8%. Under theterms of the GE facility, there are a number of undertakings related to the performance of the Company’s operations, andnon-compliance with these undertakings could constitute an event of default. Under the terms of facility the Company hasup to 90 days to remedy or rectify a non-compliance event in relation to the operational undertakings. As at the reportingdate, the Company had reported a non-compliance event, but was not in default of the facility agreement.(d) Set-off of assets and liabilitiesThe parent entity has established a legal right of setoff with a financial institution over cash on deposit to secure the issueof bank guarantees for the purpose of environmental performance bonds and rental obligations. At 30 June 2009 restrictedcash for this purpose amounted to $24,339,000 (2008: $20,597,000).stbarbara.com.au – Annual Report 2009: 79