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Notes receivable
On December 11, 2009, the Company loaned $5,000
to Timminco’s wholly-owned subsidiary, Bécancour
Silicon Inc. (“Bécancour”), in exchange for a convertible
promissory note (“Initial Convertible Note”). On
December 15, 2010, the Company amended the terms of
the loan, through an amended convertible promissory
note (“Amended Convertible Note”). As the amendments
to the debt agreement were considered substantial, the
transaction was accounted for as an extinguishment of
the Initial Convertible Note and issuance of new debt
in accordance with IAS 39. The Initial Convertible Note
had an annual interest rate of 12%, payable quarterly
in arrears starting December 31, 2009 and maturing on
January 3, 2011. The Amended Convertible Note bears
interest at 14%, payable quarterly in arrears starting
December 31, 2010 and matures on January 3, 2014. The
full principal amount is convertible into common shares
of Timminco at the conversion price, at AMG’s option at
any time, subject to customary anti-dilution adjustments.
The conversion price was amended from C$1.58 per share
under the Initial Convertible Note to a conversion price of
C$0.26 per share under the Amended Convertible Note.
Both the Initial and Amended Convertible notes were
accounted for as hybrid instruments with the note and
the equity option being valued separately. The value of the
Amended Convertible Note was $71 as of December 31,
2010. The value of the Initial Convertible Note was $3,095
as of December 31, 2009. The value of the equity option
on the Amended Convertible Note was $5,113 as of
December 31, 2010. The value of the equity option on the
Initial Convertible Note was $1,718 as of December 31,
2009. The Company recorded finance income of $371
during the year ended December 31, 2010 as a result of
a gain recognized on the amendment. The Company also
recorded finance income of $100 for an amendment fee
charged in conjunction with the amendment. Interest
income from the convertible notes was $600 the year
ended December 31, 2010. Interest income from the Initial
Convertible Note was $32 the year ended December 31,
2009. All interest for 2010 was paid as of December 31,
2010. Interest receivable related to the Initial Convertible
Note was $34 as of December 31, 2009.
On July 22, 2008, the Company loaned $5,000 to Millinet
Solar Co., Ltd., a Korean manufacturer of solar silicon.
The note was issued with a maturity date of July 22,
2010 and carried interest at a rate of 5% if Millinet went
public and 10% if Millinet did not go public. The principal
balance was not repaid on July 22, 2010 and the Company
entered into default negotiations. The final amendment
agreement was signed on March 10, 2011. According to the
agreement, Millinet agrees to repay all amounts, including
132 Notes to Consolidated Financial Statements
default interest and penalties, by February 21, 2012.
As of December 31, 2010, the Company shows interest
receivable $1,000 and the note receivable of $5,000.
In addition to the amendment agreement, a guarantee
agreement was signed by Millinet Co, Ltd. (Millinet Solar’s
parent company) and its managing director. The Company
believes book value approximates fair value due to the
short duration and recent negotiations.
33. Leases
Operating leases as lessee
The Company has entered into leases for office space,
facilities and equipment. The leases generally provide that
the Company pays the tax, insurance and maintenance
expenses related to the leased assets. These leases have
an average life of 5-7 years with renewal terms at the
option of the lessee and lease payments based on market
prices at the time of renewal. There are no restrictions
placed upon the lessee by entering into these leases.
The Company also holds a hereditary land building right
at its Berlin location. This building right requires lease
payments to be made annually and does not expire
until 2038.
Future minimum lease payments under non-cancelable
operating leases as at December 31 are as follows:
2010 2009
Less than one year 7,121 8,133
Between one and five years 19,739 24,389
More than five years 8,606 9,742
Total 35,466 42,264
During the year ended December 31, 2010 $7,942 was
recognized as an expense in the income statement in
respect of operating leases (2009: $9,069).
Finance leases as lessee
Certain subsidiaries of the Company have finance leases
for equipment and software. These non-cancelable leases
have remaining terms between one and five years. Future
minimum lease payments under finance leases are as
follows:
2010 2009
Less than one year 479 88
Between one and five years
Total minimum lease
1,336 16
payments
Less amounts representing
1,815 104
finance charges
Present value of minimum
(289) (6)
lease payments 1,526 98