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Schedule of Repayments and Vessel Capital Commitments

 enlarge Schedule of Repayments and Vessel Capital Commitments

The Group’s Treasury function arranges financing by leveraging the Group’s balance sheet to optimise the availability of cash resources of the Group. Borrowings comprise

  • bank borrowings;
  • the debt element of convertible bonds; and
  • finance lease liabilities.

The aggregate borrowings of the Group amounted to US$999.7 million (2013: US$1,037.3 million). They are denominated in United States Dollars, except at 31 December 2013 bank loans equivalent to US$22.2 million are denominated in Australian Dollars

Bank Borrowings

Bank borrowings (net of deferred loan arrangement fees) were US$668.0 million (2013: US$690.4 million) at 31 December 2014 and are in the functional currency of the business segment to which they relate. Bank borrowings reduced during the year in line with loan amortisation. Towards the year end we drew down total new bank borrowings of US$122 million – secured on 12 vessels – which will refinance the US$89 million of loans due in the first half of 2015. In addition, the Group secured additional Japanese export credit facilities totalling US$350.2 million for 18 newbuildings. The loans under these facilities will be drawn after the delivery of the vessels, starting with US$94 million which is expected to be drawn in the second half of 2015.

The Group monitors the loan-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 pledges additional cash or offers additional unmortgaged vessels as collateral.

As at 31 December 2014:

  • The Group’s bank borrowings were secured by mortgages over 69 (2013: 73) vessels with a total net book value of US$1,246.1 million (2013: US$1,225.4 million) and an assignment of earnings and insurances in respect of these vessels.
  • The Group had 30 (2013: 41) unmortgaged vessels with a total net book value of US$262.0 million (2013: US$338.4 million) split into 11 dry bulk ships with a net book value of US$220.5 million and 19 tugs and barges with a net book value of US$41.5 million.
  • The Group has been in compliance with all its loan-to-asset value requirements
  • The Group had undrawn committed bank borrowing facilities of US$350.2 million (2013: US$23.8 million).

P/L impact:

The increase in interest (after capitalisation) to US$19.2 million (2013: US$11.3 million) was mainly due to an increase in average bank borrowings to US$647.3 million (2013: US$464.2 million) and the decrease in interest capitalised to undelivered newbuild vessels to US$0.2 million (2013: US$3.3 million). Certain bank borrowings are subject to floating interest rates but the Group manages these exposures by using interest rate swap contracts.

Finance Lease Liabilities

Finance lease liabilities decreased following scheduled repayments during the year. Finance lease liabilities are allocated to the dry bulk segment in which the assets are owned.

Finance lease liabilities as at 31 December 2014 were US$18.3 million (2013: US$23.0 million) relating to three Handysize vessels with a total net book value of US$19.1 million (2013: three with a total net book value of US$25.0 million) whose bareboat charters expire in December 2015. The fixed, equal, quarterly charter-hire payments are accounted for as a combination of repayments of finance lease liabilities on the balance sheet and finance charges in the income statement. Finance charges can be expressed as interest rates, fixed for the period of the leases.

Pursuant to the terms of the bareboat charters, the Group has the option to individually re-purchase each of the three Handysize vessels at any time with three months’ notice during the bareboat charter period.

P/L impact:

Finance charges of US$1.4 million (2013: US$5.8 million) represent interest payments on Handysize vessels under finance leases.

Convertible Bonds

The debt components of the 1.75% p.a. coupon April 2016 convertible bonds and 1.875% p.a. coupon October 2018 convertible bonds changed to US$202.8 million and US$110.6 million respectively (2013: US$216.4 million and US$107.4 million) at 31 December 2014. The overall decrease in the debt component amount is mainly due to the partial repayment of the 2016 convertible bonds with a face value of US$20.4 million on 12 April 2014, following the exercise by certain bondholders of their right to redeem the bonds at 100% of the principal amount pursuant to the terms and conditions of the bonds.

The 2016 convertible bonds principal repayment is able to be funded through both new bank borrowing facilities to be arranged during 2015 using unmortgaged dry bulk vessels and the proceeds from the towage sales.

P/L impact:

The US$15.0 million (2013: US$15.2 million) interest expense of the convertible bonds is calculated at an effective interest rate of 4.9%.

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