SAPPI LIMITED

and cash equivalents were US$ 770 million. The committed facility is the e 209 million Revolving Credit
Facility which was entirely undrawn at the end of fiscal 2010 and fiscal 2009.
In 2010, our financing activities concentrated on reducing gross debt by utilizing our cash resources
to repay certain long term debt. In 2009, our financing activities concentrated on arranging longer term
debt to refinance a portion of our existing short-term debt and repurchase the vendor loan notes issued
to M-real in connection with the Acquisition. This was achieved by the issuance of US$ 300 million and
e 350 million Senior Secured Notes due 2014, the refinancing of a bank syndicated loan of e 400 million
and the extension of its maturity from 2010 to 2014, and the refinancing of our existing e 600 million
revolving credit facility maturing in 2010 which was replaced by a e 209 million Revolving Credit Facility
maturing in 2012. See ‘‘Item 10—Additional Information—Material Contracts’’.
The make-up of our gross debt by currency is shown in the following table:
Debt by currency ratio 2010 2009 2008
USD ......................................... 24.5% 28.9% 38.1%
EUR.......................................... 57.7% 55.1% 42.6%
CHF ......................................... 0.0% 0.0% 5.6%
ZAR.......................................... 17.8% 16.0% 13.7%
Included in the euro denominated debt is the US$ 300 million Senior Secured Note due in 2014
which has been swapped into euro.
Interest on Borrowings
Raising new debt and refinancing existing debt in the last quarter of fiscal 2009 resulted in
substantially higher margins than we were previously paying, mainly because of prevailing market
conditions and our credit ratings during that period. Our interest payable on borrowings has therefore
increased in fiscal 2010 compared to fiscal 2009.
Interest Rate Risk
The Group has a policy of maintaining a balance between fixed and variable rate loans which
enables it to minimize the impact of borrowing costs on reported earnings. Exceptions are made when
fixed rates can be obtained at attractive rates, as this strategy locks in acceptable interest rates for the life
of the borrowing instrument. Hedging activities in relation to borrowings are restricted to interest rate
swaps and where appropriate, cross-currency swaps.
At the end of fiscal 2008 approximately US$ 856 million of fixed rate debt was subject to interest rate
swaps, i.e. swapping fixed to floating interest rates. In June 2009 these swaps were unwound and the
underlying debt now carries the original fixed interest rates. Upon issuing the US$ 300 million Senior
Secured Notes due in 2014, they were, in August 2009, swapped from fixed USD interest rates into fixed
euro interest rates using an interest rate and currency swap. The ratio of gross debt at fixed and floating
interest rates at the end of fiscal 2010 is 80:20 compared to 85:15 at the end of fiscal 2009.
Summary of Certain Debt Arrangements
Set forth below is a summary of certain key terms of some of our significant debt arrangements.
Reference should also be made to those debt arrangements which are filed as, or incorporated by
reference as, exhibits to this Annual Report. See ‘‘Item 10—Additional Information—Material Contracts’’,
Note 20 to our Group Annual Financial Statements and ‘‘Off-Balance Sheet Arrangements’’.
Revolving Credit Facility. On August 27, 2009, we replaced our existing revolving credit facility with
a new revolving credit facility providing for up to e 209 million of borrowing availability in euro, US dollars
and certain other currencies (the ‘‘Revolving Credit Facility’’). The commitments under the Revolving
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