Financial instruments

Derivative instruments

Forward and swap agreements are forward foreign currency transactions conducted at a predeterminad exhcange rate. The Group applies hedge accounting, which results in the effective portion of gains and losses on fair value of hedging instruments (forward transactions) is included in other comprehensive income and presented as a separate equity position "cash flow hedge". The gains or losses previously recognized in other comprehensive income are transferred to profit or loss over the same period and in the same position in which the hedged cash flows are recognized in the statement of comprehensive income. The ineffective portion of changes in the fair value of the derivative is recognized immediately in profi or loss. The effective portion of cash flow hedge with respect to the firm purchase commitment to acquire shares in Pfleiderer GmbH was included in the amount of goodwill recognized on the acquisition date.

Borrowings

As at 31 December 2016, the Group did not carry any borrowings from related parties.

Bank loans and corporate bonds

Use of bank borrowings

 

 

 

BORROWINGS AND OTHER DEBT INSTRUMENTS

'000 EUR 31 DEC 2016 31 DEC 2015
Non-current liabilities    
Non-current portion of interest-bearing bonds 329,762 -
Bank borrowings - 9,598
Total 329,762 9,598
Current liabilities    
Current portion of interest-bearing bonds 10,555 5,089
Other interest bearing liabilities 343 -
Total 10,898 5,089

On June 27, 2014, PCF GmbH issued 7,875% Senior Secured Notes due 2019 with a face value of EUR 321,684 thousand.

When determining fair values during purchase price allocation for the Pfleiderer Group acquisition, the notes were marked-to-market on the transaction date 19 January 2016 (EUR 332,943 thousand). The premium to fair value has been amounted since then over the term of notes in accordance with the effective interest rate method (EUR 3,181 thousand premium was expensed in 2016). The notes have a carrying value of EUR 329,762 thousand as of 31 December 2016. The short term portion of interest bearing notes relates to accrued interest.

 

 

 

BANK LOANS

On June 26, 2013, the Parent Company and the subsidiaries: Pfleiderer Prospan S.A. and Pfleiderer Silekol Sp. zo.o. concluded credit facility agreements with the following banks: Bank Millennium S.A., Alior Bank S.A. and Bank Zachodni WBK S.A. The total credit limit available under the facilities provided by those banks amounted to PLN 260 million and secured the financial liquidity of the Parent Company and its subsidiaries. All these bank credit lines were repaid fully on February 11, 2016, from own cash reserves and were replaced by new Revolving Credit Facilities ("RCF") Agreement with a consortium of four German and four Polish banks with a sublimit for Pfleiderer Group S.A. and significant Polish subsidiaries amounting to PLN 200 million and for PCF GmbH and Pfleiderer Deutschland GmbH amounting to EUR 60 million.

On January 19, 2016, an amendment to the RCF Agreement came into force which provided Pfleiderer Group S.A. and Polish subsidiaries a limit of PLN 200 million (Tranche B) for financing of working capital and other coporate needs. Moreover on July 8, 2016 two more Polish subsidiaries - Pfleiderer Grajewo Sp. z o.o. and Pfleiderer polska Sp. z o.o. (previously Pfleiderer Services Sp. z o.o.) - acceded RCF Agreement. At the reporting date this financing was not drawn in cash whilst bank guarantees wer issued within this credit line for the total amount of PLN 6,559 thousand respectively. The RCF Agreement provides Pfleiderer Deutschland GmbH and PCF GmbH with up to EUR 60.0 million (Tranche A). This Tranche A is partially drawn for bank guarantees of EUR 2,092 thousand and PLN 1,040 thousand (EUR 236 thousand). This RCF expires on April 30, 2019. Interest on cash drawings as accrued at EURIBOR (for EUR-drawings) plus margin, WIBOR (for PLN-drawings) plus margin, LIBOR (for drawings in other currencies) plus margin.

 

 

 

 FINANCING CORE EAST (EXCLUDING FACTORING AND OPERATING LEASES)

  31 DEC., 2016
LENDER
CURRENCY
INTEREST RATE
DURATION FORM
DURATION TO
CREDIT LIMIT EUR
DRAWN AMOUNT EUR
UNDRAWN AMOUNT EUR
CORE EAST - RCF              
Bank Millennium S.A. PLN WIBOR + margin 19 Jan 2016 30 Apr 2019 2,267 - 2,267
Bank Millennium S.A. (Anciliary) PLN WIBOR + margin 4 Feb 2016 30 Apr 2019 7,129 - 7,129
Bank Zachodni WBK S.A. PLN WIBOR +margin 19 Jan 2016 30 Apr 2019 4,535 - 4,535
Bank Zachodni WBK S.A. (Anciliary) PLN WIBOR + margin 4 Feb 2016 30 Apr 2019 6,802 - 6,802
PKO Bank Polski S.A. PLN WIBOR + margin 19 Jan 2016 30 Apr 2019 4,535 - 4,535
PKO Bank Polski S.A. (Anciliary) PLN WIBOR + margin 4 Feb 2016 30 Apr 2019 6,802 - 6,802
Alior Bank S.A. PLN  WIBOR + margin 19 Jan 2016 30 Apr 2019 6,802 - 6,802
Alior Bank S.A. (Anciliary) PLN WIBOR + margin 4 Feb 2016 30 Apr 2019 4,535 - 4,535
GUARANTEES CORE EAST
Bank Millennium S.A. PLN   4 Jul 2014 30 Apr 2019 1,487 1,487  
LIMIT OF CREDIT CARDS EAST
Bank Millennium S.A. PLN   4 Jul 2014 30 Apr 2019 453 20 433
TOTAL CORE EAST
  
  
  
  
45,347
1,507
43,840

 

 

 

FINANCING CORE WEST (EXCLUDING FACTORING AND OPERATING LEASES)

  31 DEC., 2016
LENDER
CURRENCY
INTEREST RATE
DURATION FORM
DURATION TO
CREDIT LIMIT EUR
DRAWN AMOUNT EUR
UNDRAWN AMOUNT EUR
CORE WEST - RCF              
BNP Paribas EUR EUROIBOR + margin 4 Jul 2014 30 Apr 2019 15,000 - 15,000
KfW EUR EUROIBOR + margin 4 Jul 2014 30 Apr 2019 15,000 - 15,000
Commerzbank AG EUR EUROIBOR +margin 4 Jul 2014 30 Apr 2019 3,000 - 3,000
Commerzbank AG (Ancillary) EUR EUROIBOR + margin 4 Jul 2014 30 Apr 2019 9,672 - 9,672
Deutsche Bank AG EUR EUROIBOR + margin 4 Jul 2014 30 Apr 2019 7,500 - 7,500
Deutsche Bank AG (Ancillary) EUR EUROIBOR + margin 4 Jul 2014 30 Apr 2019 6,000 - 6,000
GUARANTEES CORE WEST
Commerzbank AG EUR   4 Jul 2014 30 Apr 2019 2,328 2,328 -
Deutsche Bank AG (Ancillary - Guarantees) EUR   4 Jul 2014 30 Apr 2019 1,500 - 1,500
Several bond holders EUR   7 Jul 2014 1 Aug 2019 321,684 321,684 -
TOTAL CORE WEST
  
  
  
  
381,684
324,012
57,672

Credit agreements for special purposes

Investment facility agreement with PKO BP S.A.

On 15 January 2007, Pfleiderer MDF Sp. z o.o., a subsidiary, entered into a PLN 235,022 thousand investment facility agreement with PKO BP S.A. It is a special-purpose facility obtained to finance the construction of the MDF board production plant in Grajewo.

This bank loan was fully repaid on February 11, 2016. (As at 31 Decdember 2015, the Group's debt outstanding under this facility was PLN 62,626 thousand).

Multi-purpose facility agreement with PKO BP S.A.

On August 29, 2007, Pfleiderer MDF Sp. z o.o., a subsidiary, entered into a PLN 65,000 thousand multi-purpose facility agreement with PKO BP S.A. The original value of the loan amounted to PLN 65,000 thousand and included an overdraft of PLN 30,000 thousand, a working overdraft facility of PLN 30,000 thousand as well as a facility for guarantees and letters of credit with a limit of PLN 5,000 thousand.

On June 10, 2015, Pfleiderer MDF Sp. z o.o., a subsidiary, signed an amendment to the multi-purpose facility agreement with PKO BP S.A. According to the amendment, the terms of the multi-purposes facility agreement was extended until May 31, 2018. Under the amendment, the amount of the multi-purpose facility loan was reduced to PLN 54,000 thousand. This bank loan was repaid fully on February 11, 2016.

Revolving facility agreement

On 5 October 2015, the entity Pfleiderer Grajewo S.A. along with other companies belonging to the Pfleiderer Group:

  • PCF GmbH, Pfleiderer Services GmbH, Pfleiderer Deutschland GmbH,
  • Pfleiderer Neumarkt GmbH, Pfleiderer Leutkirch GmbH, Pfleiderer Gütersloh GmbH,
  • Pfleiderer Arnsberg GmbH, Pfleiderer Baruth GmbH, Jura Spedition GmbH,
  • Pfleiderer Vermögensverwaltung GmbH & Co. KG, Pfleiderer Prospan S.A., Pfleiderer MDF Sp. z o.o., Pfleiderer Silekol Sp. z o.o.

concluded the Amendment Agreement amending the super master revolving credit facility of 4 July 2014 concluded by entities belonging to the Western Segment of the Pfleiderer Concern. This Agreement is called the “Revolving Facility Agreement” and was concluded with the mandated lead arrangers, which include:

Commerzbank Aktiengesellschaft Deutsche Bank AG Filiale Deutschlandgeschäft
KFW BNP Paribas S.A. Niederlassung Deutschland
Alior Bank S.A. Powszechna Kasa Oszczędności Bank Polski S.A.
Bank Zachodni WBK S.A. Bank Millennium S.A.

and
 

Commerzbank International S.A.

as the credit agent “Agent”
Commerzbank Aktiengesellschaft as a security agent “Security Agent”
Filiale Luxemburg as a security agent “Security Agent”

 

All amendments to the Revolving Facility Agreement were concluded conditionally and entered into force on 19 January 2016 along with the completion of the reorganization of the Group Pfleiderer Group S.A.

With effect from 19 January 2016, the Company and the subsidiaries Pfleiderer Prospan S.A., Pfleiderer MDF Sp. z o.o. and Pfleiderer Silekol Sp. z o.o. became borrowers under the Revolving Facility Agreement (along with PCF GmbH and Pfleiderer Deutschland GmbH). In addition, under certain conditions, Pfleiderer Group S.A. may request its other subsidiaries to join the Revolving Facility.

Under the Revolving Facility Agreement, the original amount of the revolving facility of EUR 60,000 thousand was increased by inclusion of additional tranche in the amount of PLN 200,000 thousand. Credits facilities will be provided for use in the form of payments in EUR and PLN, and in the form of Ancillary Facilities (as defined below).

The date of expiry of the agreement and its full repayment has been established as 30 April 2019.

The Lender, or its affiliates, may provide a particular borrower with all or part of the unused funds under the Revolving Facility Agreement through ancillary facilities (such as overdrafts, guarantees, bonds, letters of credit, short-term loans and other loans or solutions required in a connection with the operations of Pfleiderer Group S.A. and its subsidiaries, which have been agreed between Pfleiderer Group S.A. and the particular borrower or its associated company).

The total agreed limits amount to EUR 20,000 thousand in case of tranches in EUR and PLN 120,000 thousand in case of tranches in PLN.

Funds paid under the Revolving Facility Agreement will be assigned to financing corporate needs and the working capital of Group Pfleiderer Group SA, whereby they cannot be assigned to redeem, repay, repay early, purchase or cancel any Senior Secured Notes issued by Pfleiderer GmbH on 7 July 2014.

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