XXII. Bonds

XXII. Bonds

On 22 December 2008 the convertible bonds issued by Autogrill Finance S.A. in 1999 were fully redeemed, for a residual nominal value of €47,680k. The reason for the early redemption was to help simplify the Group's ownership structure.

"Non-convertible bonds" refer to:

  • a private placement issued on 23 January 2003 by HMSHost Corp. for a total of $370m. The issue was guaranteed by Autogrill S.p.A. and is in three tranches of $44m, $60m and $266m, maturing respectively in 2010, 2011, and 2013. The tranches pay fixed-rate interest half-yearly;
  • a private placement issued on 9 May 2007 by Autogrill Group Inc. for a total of $150m. Guaranteed by Autogrill S.p.A., these bonds pay fixed annual interest of 5.73% half-yearly, and mature on 9 May 2017.

Exposure to fair value fluctuations is hedged by an interest rate swap with a notional value of $75m. Under the rules for fair value hedge accounting, the gain or loss on the hedged item attributable to the hedged risk adjusts the carrying amount of that item and is recognised in profit or loss, as is the gain or loss from the subsequent fair value measurement of the hedge. In 2008 there was a loss on the hedged item of $11.5m (€7.8m) and a gain on the hedge of the same amount, so the effect on the income statement was nil. Since the inception of the bond loan, fair value has changed by $14.4m (€10.4m).

As do long-term bank loans, the private placement regulations include covenants requiring the periodic monitoring of the Group's financial ratios (leverage and interest coverage). The leverage ratio must not exceed 3.5, although it can reach 4.0 for a maximum of three half-years (not necessarily in a row), and the interest coverage cannot be lower than 4.5.

For the calculation of the leverage ratio and interest coverage, net financial position, EBITDA and financial expense are measured according to definitions in the loan contracts and therefore differ from the amounts in the financial statements.
At 31 December 2008, as in all previous observation periods, these covenants were fully satisfied. On a currency-adjusted basis there would have been a decrease of €32,140k.