Tools

Store page My Annual Report(0) Download Center Social Bookmarks

History

Borrowings

Borrowings

The Group’s Treasury function arranges financing by leveraging the Group’s balance sheet to optimise the availability of cash resources of the Group. The aggregate borrowings of the Group at 31 December 2017, which comprised secured borrowings and the liability component of convertible bonds, amounted to US$881.0 million (2016: US$839.2 million) and are mainly denominated in United States Dollars.

Secured Borrowings – US$763.3 million (2016: US$723.8 million)

Secured borrowings are in the functional currency of the business segment to which they relate. The overall increase in secured borrowings is mainly due to the drawdowns under our Japanese export credit facilities and other borrowings, partially offset by scheduled loan amortisation.

During the year, we drew down all our remaining committed loan facilities, which comprise our Japanese export credit facilities of US$139.7 million secured on seven newbuildings which were delivered in the first half of 2017 and other borrowings of US$18.2 million in respect of two existing vessels.

The Group monitors the loans-to-asset value requirements on its bank borrowings. If the market values of the Group’s mortgaged assets fall below the level prescribed by our lenders, the Group may pledge additional cash or offer other additional collateral unless the banks offer waivers for technical breaches.

As at 31 December 2017:

  • The Group’s secured borrowings were secured by 96 vessels with a total net book value of US$1,625.8 million and an assignment of earnings and insurances in respect of these vessels.
  • The Group was in compliance with all its loans-to-asset value requirements.

P/L impact:

The increase in interest (after capitalisation) to US$29.1 million (2016: US$22.1 million) was mainly due to an increase in average secured borrowings to US$794.9 million (2016: US$564.2 million).

Certain secured borrowings are subject to floating interest rates but the Group manages these exposures by using interest rate swap contracts.


Convertible Bonds – Liability Component is US$117.7 million (2016: US$115.4 million)

As at 31 December 2017 and 31 December 2016, there remained the 3.25% p.a. coupon July 2021 convertible bonds with an outstanding principal of US$125.0 million and the prevailing conversion price of HK$3.07.

P/L impact:

The US$6.4 million (2016: US$12.4 million) interest expense of the convertible bonds is calculated at an effective interest rate of 5.7% (2016: 5.2%).

TOP
You're viewing Borrowings