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Notes to the Financial Statements 2018
15. Borrowings
Interest bearing borrowings are initially recognised at fair value on transaction date, less directly attributable transaction costs, and subsequently measured at amortised cost using the effective interest rate method.
June 2018 NZ$M
June 2017 NZ$M
Fletcher Building Group
Private placements
139
35
Other loans Capital notes
59 71
150 185
Current borrowings
269 389
97
Bank loans
1,181
Private placements
1,123
59
Other loans Capital notes
62
416
329
Non-current borrowings
1,753 1,938
1,903 2,172
Carrying value of borrowings (as per balance sheet)
(92)
Less: impact of debt hedging activities (included within derivatives)
(42)
Borrowings after impact of hedging activities Add: fair value adjustment included in borrowings Borrowings excluding derivative adjustments
1,846
2,130
31
1,877 2,705
2,130 2,666
Total available funding
Unutilised banking facilities
828
536
The undrawn facilities have a weighted average maturity of 3.1 years (June 2017: 3.0 years).
June 2018 NZ$M
June 2017 NZ$M
Fletcher Building Group Net Debt Cash and cash equivalents
665
219
(185)
Current borrowings
(269)
(1,753) (1,273)
Non-current borrowings
(1,903) (1,953)
Net Debt
Cash and cash equivalents NZ$M
Private placements NZ$M
Bank Loans NZ$M
Other loans NZ$M
Capital notes NZ$M
Total NZ$M
Movement in net debt Net debt as at 1 July 2017
219 440
(389)
(1,262)
(121)
(400) (166)
(1,953)
292
147
44
757
Cash flows
6
(97)
(17)
(108)
Currency translation
Other non-cash movements (including derivatives) Net debt as at 30 June 2018
31
31
665
(97)
(1,181)
(94)
(566)
(1,273)
Change in covenant terms As a result of the recognition and additional provisions associated with the B+I business unit, the Group was in breach of certain financial covenants in relation to its borrowings (refer to Note 2) as at 31 December 2017. This breach was an event of default under the agreements governing those borrowings. The Group obtained temporary waivers for the breach of these covenants and in May 2018 reached agreement with its commercial banking syndicate and USPP noteholders on revised terms of its lending arrangements. The key terms agreed are as follows: • Previously announced B+I losses will be excluded from covenant calculations; • Revised financial covenants: senior leverage ratio <3.25x; senior interest cover >3.00x; total interest cover >2.00x; • Until the earlier of 30 June 2019 or the date on which the senior leverage ratio (including the previously announced B+I losses) is less than 1.75x for three consecutive months: –– an additional margin will be payable of 1.25%; and, –– proceeds from disposals of assets above a threshold must be first offered for repayment of senior debt.
76 Fletcher Building Limited Annual Report 2018
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