ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
35 MAJOR NON-CASH TRANSACTIONS
According to the relevant tax regulations in Mongolia, the income tax payable can be offset by the VAT
receivables. During the year ended 31 December 2015, the Group offset the VAT receivables of USD244,000
(2014: USD3,729,000), USD1,271,000 (2014: USD2,452,000), USD4,162,000 (2014: USD7,195,000) and
USD22,349,000 (2014: USD23,759,000) with income tax payable, air pollution fee, royalty tax payable and
payables due to suppliers, respectively.
During the year ended 31 December 2015, the Group offset no promissory notes payable (2014:
USD45,174,000) with trade receivables due from QGX Holding Ltd. (see Note 24(iv)).
During the year ended 31 December 2015, according to the agreement with Thiess Mongolia LLC
(previous Leighton LLC), the Group offset prepayment of maintenance due from Thiess Mongolia LLC of
USD10,000,000 (2014: USD12,408,000) with trade payables due to Thiess Mongolia LLC.
36 SUBSEQUENT EVENTS AFTER THE BALANCE SHEET DATE
(a)
On 11 March 2016, the Group entered into the Deed of Termination and Release (the “DTR”) with
EBRD, FMO, and DEG (the “Parallel Lenders”) regarding the repayment of secured interest-bearing
borrowings (see Note 23). Pursuant to the DTR, the Group shall endorse to the Parallel Lenders certain
promissory notes issued by MOF (see Note 21(c) (iv)) with total amount of approximately MNT105.6
billion and in return the obligations under the borrowings will be discharged in their entirety and
the relevant security thereunder will be released after 121 calendar days plus 2 business days from
the signing of the DTR (the “Timing Condition”). Until the issuance of the consolidated financial
statements, the Group had completed the endorsement of promissory notes as required by the DTR.
(b) Pursuant to a temporary waiver letter granted by the Lenders of the BNP and ICBC Facility on 14
March 2016, the Group is due to repay principal installments of approximately USD36.8 million together
with applicable interest payment on 22 March 2016. As of the issuance of the consolidated financial
statements, the Group had neither made the payment to the Lenders nor been able to secure any
waiver or forbearance from the Lenders in this regard. As such, an event of default under the BNP and
ICBC Facility has taken place, which also constitutes an event of default under certain of the Group’s
other indebtedness that contain cross-default provisions, including the Senior Notes issued by the
Group with a principal amount of USD600 million due on 29 March 2017.
The Group has proposed to enter forbearance agreements with both the Lenders and the steering
committee of the holders of the Senior Notes (the “Steering Committee”). The Group is in discussion
with and intends to continue dialogue with the Lenders and the Steering Committee and their respective
advisers. Also, until the issuance of the consolidated financial statements, the Group had not obtained
corresponding waivers from BNP Paribas Singapore Branch and Industrial and Commercial Bank of
China Limited in respect of the financial covenants breach of the BNP and ICBC Facility. As such, an
event of default under the BNP and ICBC Facility has taken place. The Group has initiated discussions
with the Lenders for revised terms of the debt facility. Given the material amount of the BNP and ICBC
Facility and also existing Intercreditor Agreement between Lenders and the holders of the Senior Notes
in relation to the shared securities and guarantees, the discussions to revise the BNP and ICBC Facility
are undertaken in connection with the debt restructuring in respect of the Senior Notes. The Group
continues discussion with the Lenders regarding waivers on breach of certain security coverage ratio
and financial covenants under the BNP and ICBC Facility.
Annual Report 2015
195