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ANNUAL REPORT 2010

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Skip Navigation LinksFinancial Report > Notes to the Consolidated Financial Statements > Note 18. Interest Bearing Loans And Borrowings

note 18. interest bearing loans and borrowings

CONSOLIDATED
Maturity 2010
US$M
2009
US$M
Current47.914.2
Secured bank loan
Non Current
Unsecured convertible bonds2011236.7227.5
Unsecured convertible bonds 2013310.1304.6
Secured bank loan201224.039.9
Secured bank loan2015111.4-
Total non current682.2572.0

The above figures include deferred borrowing costs.

Fair value disclosures

Details of the fair value of the Group’s interest bearing liabilities are set out in Note 22.

Unsecured convertible bonds

On 15 December 2006, the Company issued US$250M in convertible bonds with an underlying coupon rate of 4.5% (underlying effective interest rate of 8.75%), maturity 15 December 2011 and a conversion price of US$7.685 for Company shares.

On 11 March 2008, the Company issued US$325M in convertible bonds with an underlying coupon rate of 5.0% (underlying effective interest rate of 7.13%), maturity 11 March 2013 and a conversion price of US$6.59 for Company shares.

In disclosing the convertible bonds in the Consolidated Financial Statements, the Company has accounted for them in accordance with Australian Accounting Standards. Under these standards the convertible bonds consist of both a liability (underlying debt) and equity component (conversion rights into Company shares).

Secured bank loans

On 26th May 2006 the Company entered into a project financing facility amounting to US$71M for the construction of the Langer Heinrich Mine. The financing is provided by Société Générale Australia Branch (as lead arranger), Nedbank Capital and Standard Bank Limited and consists of a seven year Project Finance Facility of US$65M and a Standby Cost Overrun Facility of US$6M. The Project Finance Facility bears interest at a margin over the London Interbank Offered Rate (LIBOR) and is repayable on a six monthly basis over the term of the loan. No requirement for political risk insurance exists under the terms of the Project Finance Facility. The facilities are secured with fixed and floating charges over the assets of LHUPL and its immediate holding companies. Paladin had provided a project completion guarantee as part of the facilities. The guarantee has since been released when the project satisfied the Completion Tests mid 2009.

At 30 June 2010 US$47.5M (2009: US$54.1M) was outstanding under the project finance facilities. Following principal repayments of US$7.6M in July 2010 the outstanding debt balance had reduced to US$39.9M.

On 30th March 2009, the Company entered into a project financing facility amounting to US$167M for the construction of the Kayelekera. The project finance consists of a six year Project Finance Facility of US$145M, a Standby Cost Overrun Facility of US$12M and a Performance Bond Facility of US$10M. The facilities are being provided by Société Générale Corporate and Investment Banking (as inter-creditor agent and commercial lender), Nedbank Capital a division of Nedbank Limited (ECIC lender) and Standard Bank Limited (as ECIC facility agent and lender). The facilities are secured over the assets of PAL and are repayable every four months over the term of the loan.

At 30 June 2010 US$145M (2009: US$Nil) had been drawn of the project finance facilities. Following principal repayments of US$9.1M on the 31st July 2010 the outstanding debt balance had reduced to US$135.9M.

Deferred Borrowing costs relating to the establishment of the facilities have been included as part of interest bearing loans and borrowings.

Financing facilities available

At reporting date, the following financing facilities had been negotiated and were available:

Consolidated
2010
US$M
2009
US$M
Total facilities:
Unsecured convertible bonds575.0575.0
Secured bank loans204.554.1
779.5629.1
Facilities used at reporting date:
Unsecured convertible bonds575.0575.0
Secured bank loans192.554.1
767.5629.1
Facilities unused at reporting date:
Unsecured convertible bonds--
Secured bank loans12.0-
12.0-

Assets pledged as security

The carrying amounts of assets pledged as security for current and non current interest bearing liabilities (secured bank loans) are:

Consolidated
2010
US$M
2009
US$M
Current
Floating charge
Cash and cash equivalents47.319.6
Trade and other receivables41.524.1
Inventories102.552.6
Total current assets pledged as security191.396.3
Non Current
Inventories40.824.9
Property, plant and equipment533.2153
Mine development119.214.6
Deferred tax asset-3.9
Intangible assets24.615.6
Total non current assets pledged as security717.8212
Total assets pledged as security909.1308.3

2010 assets pledged include both LHM and KM whereas 2009 includes LHM only.