O TTO M ARINE L IMITED - Microsoft Internet Explorer - SGX

16 Loans and Overdraft
OTTO MARINE LIMITED AND ITS SUBSIDIARIES
2007 2006 2005
$’000 $’000 $’000
Bank overdraft (Note a) . . . .................................. — 1,751 4,998
Loan from a third party (Note b) ............................... — — 5,418
Bank loan 1 (Note c) ....................................... — — 15,338
Bank loan 2 (Note d) ....................................... 76,903 25,751 —
Bank loan 3 (Note e) ....................................... 17,277 — —
Bank loan 4 (Note f). ....................................... 90,183 10,735 —
184,363 38,237 25,754
Presented as:
Current ................................................ 136,847 38,237 25,754
Non - current. ........................................... 47,516 — —
184,363 38,237 25,754
In 2005, the Group did not meet one of the financial covenants required by the lending bank for
Bank loan 1. Accordingly, the loan is classified as current liability in the balance sheet as at
December 31, 2005. The loan was fully repaid in 2006.
The Group’s borrowings that are not denominated in the functional currencies of the respective
entities are as follow:
2007 2006 2005
$’000 $’000 $’000
United States dollar ........................................ 181,305 36,486 20,756
Note a:
The bank overdraft was repayable on demand. The average effective borrowing interest rate on
bank overdraft approximated 5.5% per annum for both 2006 and 2005 and is determined based on
Singapore dollar prime lending rate. The bank overdraft is secured by:
a charge over the Company’s plant and equipment;
a charge over a related party’s interest in quoted shares;
a corporate guarantee from a related party;
fixed and floating debentures over asset of the Company and a related party respectively; and
joint and several guarantees from shareholders and a director.
Note b:
In 2005, the loan from a third party bore interest at 4.5% per annum. The loan was secured by a
guarantee from a shareholder and a charge over the shares of the subsidiary. The loan was fully repaid
in 2006.
Note c:
In 2005, Bank loan 1 was arranged at floating interest rates which were subject to change at the
bank’s discretion and exposed the Group to cash flow interest rate risk. The effective interest rate
averaged at 7.8% per annum. The bank loan was secured by a charge over one of the subsidiary’s
property, plant and equipment.
Note d:
In 2007 and 2006, Bank loan 2 is arranged at floating interest rates which are subject to change at
the bank’s discretion and exposes the Group to cash flow interest rate risk. The effective interest rate
averages at 8% per annum for both 2007 and 2006. Out of the total Bank loan 2 of $76,903,000,
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