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On 31 December 2018 the Group exhibits only short-term borrowings for a total amount of Euro 211,129 thousands, which includes the debt of Euro 60,000 thousands under the Euro 150,000 thousand Revolving Credit Facility (the “2014 RCF”) and the debt under the equity linked Bond of Euro 147,849 thousand (Euro 150,000 thousand par value) with maturity in May 2019.
The unsecured and unsubordinated equity-linked Bond issued on 22 May 2014 by the parent company Safilo Group S.p.A., guaranteed by Safilo S.p.A., maturing on 22 May 2019 with an aggregate principal amount of Euro 150,000 thousand, has been reclassified to the item “short term borrowings”. At final maturity, on 22 May 2019, the Bonds will be redeemed at their principal amount.
The short-term factoring facility has not been utilized as at 31 December 2018 by the subsidiary Safilo S.p.A. (10,000 thousand Euro utilization as at 31 December 2017).
In the context of the capital increase executed during December 2018 through 2 January 2019, the Group has requested and obtained from its lenders the extension of the maturity date of the “2014 RCF” from 30 November 2018 to 31 January 2019, as well as the waiver of the covenant tests as of 30 June 2018 and 31 December 2018. During 2018 the Group has gradually utilized the full Euro 150,000 thousand “2014 RCF” and finally repaid and cancelled a total amount of Euro 90,000 thousand, hence reducing its utilization and relevant commitment to Euro 60,000 thousand.
The unsecured and unsubordinated equity-linked Bonds were issued in 2014 at par, in the nominal amount of Euro 100,000 per Bond with a coupon of 1.25% per annum, payable semi-annually in arrears on 22 November and 22 May of each year. The Bonds became convertible into ordinary shares of Safilo Group S.p.A. following the approval on 10 July 2014 of the extraordinary general meeting of the Company of a capital increase to be solely reserved for the purposes of the conversion of such Bonds. The initial conversion price was set at Euro 21.8623 (Euro 13.5249 after the adjustment due to the December 2018 share capital increase).
This bond is carried at amortised cost, at an effective interest rate equal to 5.101%. Given the presence of a “cash settlement option”, the conversion option component represents an embedded derivative financial instrument booked in the corresponding balance sheet item under liabilities. The fair value changes of this instrument are immediately charged to the income statement. At the balance sheet date, the fair value of the option amounts to nil.
With regards to the comprehensive refinancing plan announced on 26 September 2018, the Group has executed a new committed, unsubordinated and unsecured Term and Revolving Facility Agreement for a total amount equal to Euro 150,000,000 (the “2018 T&RCF), including a Term loan facility of Euro 75,000,000 and a Revolving Credit Facility of equal amount, both maturing on 30 June 2023, between the subsidiary Safilo S.p.A. and a pool of banks formed by Banca IMI S.p.A., BNP Paribas Italian Branch and Unicredit S.p.A. as arrangers, BNP Paribas Italian Branch, Intesa Sanpaolo S.p.A. and Unicredit S.p.A. as lenders, and Unicredit S.p.A. as agent bank. The new credit agreement can be partially syndicated and increased up to a maximum amount of Euro 200,000,000 having new lenders possibly accessing the agreement.
The “2018 T&RCF” will be effectively available upon redemption at maturity of the Euro 150,000,000 Equity Linked Bonds 2019. The Group, as at 31 December 2018, has no financial borrowings in currencies other than Euro.