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Solvay Global Annual Report 2007
Financial debt
Financial debt increased by EUR 191 million from EUR 1 691 million to EUR 1 882 million.
Other short-term borrowings rose, mainly due to the use of the Belgian Treasury Bills program in an amount of
EUR 143 million (EUR 0 million at the end of 2006). The rise in long-term debts to financial institutions is explained
by the long-term borrowing obtained by Solvay Indupa to finance the industrial projects in Brazil.
EUR Million 2006 2007
Subordinated loans 500 500
Bonds 804 800
Long-term finance lease obligations 11 8
Long-term debts to financial institutions 162 192
Other long-term debts 26 65
Amount due within 12 months (shown under current liabilities) 10 9
Other short-term borrowings (including overdrafts) 178 308
Total financial debt (short and long-term) 1 691 1 882
Borrowings and credit lines
The largest borrowings maturing after 2006 are:
• in Belgium: EMTN-note type bond issues by Solvay S.A. totalling EUR 800 million:
- 4.99 % fixed rate EUR 500 million, maturing 2014;
- 4.75 % fixed rate EUR 300 million, maturing 2018;
• in France: a EUR 500 million subordinated debt issue by Solvay Finance S.A. with support from Solvay S.A.
This borrowing matures in 2104 and carries an annual coupon of 6.375 %. Rating agencies Moody’s and Standard
& Poors have treated this issue as part equity, part debt. In IFRS, however, it is treated 100 % as debt. This debt
is subordinated to the other debts of the Group and is listed in Luxembourg. The coupon carries a fixed rate
for the first ten years. In 2016 the coupon converts to a floating rate (3-month Euribor + 335 basis points) until
maturing in 2104. Solvay has an option to redeem this issue at par from 2016 onwards. The issuer has a coupon
non-payment option governed by the rules of the coupon carryforward mechanism;
• in Germany: our 75 % share in the financing of SolVin, amounting to EUR 130 million until EUR 2008
and EUR 120 million from 2008 to 2012 (including EUR 90 million at the fixed rate of 3.54 % until 2008);
• in Austria: our 50 % share of the EUR 165 million (revolving credit) borrowed to finance Pipelife
(final maturity: 2012).
Fair value of financial debts
For floating rate financial debts and fixed-rate debts which have been the subject of a fixed/floating interest rate
swap, the fair value is equal to the face value. The fair value of the Group’s fixed rate debt at the end of 2007
is based on the quotations obtained:
• EMTN EUR 500 million 2014: EUR 494 million,
• EMTN EUR 300 million 2018: EUR 282 million,
• Hybrid EUR 500 million 2104: EUR 497 million,
• Group’s share (75 % out of the total of EUR 90 million = EUR 67.5 million) in the fixed-rate financing
of SolVin: EUR 68 million.