KGHM Group liabilities due to credits, loans and debt instruments
|mn PLN||2013||2014||Change||Change %|
|Non-current borrowings||1 680||2 969||1 289||76.7%|
|Other loans||5||1 057||1 052||21 040.0%|
|Debt instruments||1 513||1 769||256||16.9%|
|Current borrowings||1 198||1 798||600||50.1%|
|Bank loans||1 186||1 782||596||50.3%|
|Debt instruments (interest)||9||6||(3)||(33.3%)|
|Total:||2 878||4 767||1 889||65.6%|
Source: Management Report on the activities of the KGHM Polska Miedź S.A. Group in 2014.
Total Group liabilities due to borrowings and debt instruments at the end of 2014 amounted to PLN 4 767 million and increased by PLN 1 889 million compared to 2013 (65.6 per cent). This increase resulted from an increase in liabilities from credits and loans by KGHM Polska Miedź (an increase of PLN 985 million, mainly as a result of investment borrowing) and by KGHM INTERNATIONAL LTD. (an increase of PLN 701 million). In addition, in 2014 there was an increase in the value of debt instruments by PLN 253 million compared to 2013.
In 2014, KGHM Polska Miedź began the process of Group debt consolidation by acquiring medium and long term financing. Consolidation of the Group’s debt at the Parent Entity level is the basic premise of the new funding strategy.
This strategy will achieve significant savings in debt servicing costs of the Group and is consistent with best market practices for financing large international groups. In addition, it will allow for an increase in the effectiveness of the liquidity management process, simplifying the structure of external financing and optimizing financial and non-financial covenants within the Group.
Government support of the Parent Entity in the period 1 January 2014 to 31 December 2014 amounted to PLN 2 million, while government support of the Group amounted to PLN 8 million.
The increase in Net debt/EBITDA in 2014 to a level of 0.82 was due to an increase in borrowings (PLN 4.8 billion at the end of the year) with accumulated cash at a level of PLN 0.5 billion. In 2014, KGHM secured funding for a strategic investment program amounting to PLN 14 billion, mainly through:
- The conclusion, in 2014, of the agreement on an unsecured, syndicated revolving credit facility in the amount of USD 2.5 billion for a period of five years with an option of extension for a further two years
- The conclusion, in 2014, of an agreement for an investment loan from the European Investment Bank in the amount of PLN 2 billion, with a repayment term for borrowed tranches up to a maximum of 12 years from the drawdown date. The tranches’ availability period is 22 months from the date of signing the contract
- Credit lines held within the framework of concluded bilateral short-term agreements for a total amount of PLN 3.3 billion. These include short-term working capital loans with periods of availability of up to 2 years. Expiry dates of contracts are successively extended for further periods