Elkem will focus on having a capital structure that is appropriate to the company’s objective, strategy and risk profile.
Elkem aims to maintain an investment grade profile and targets a leverage ratio in the level of 1.0 – 2.0x. Leverage is defined as Net interest bearing debt to LTM EBITDA.
Elkem aims to keep a liquidity reserve of not less than 10% of the group’s annual turnover. The liquidity reserve is defined as cash and available credit lines.
Elkem will target a smooth maturity profile and a diversified loan portfolio. The intension is to refinance any significant debt obligation well in advance of its final maturity date. Elkem will primarily follow a floating interest rate policy.
Elkem has a revolving credit facility of EUR 250 million maturing in 2023 provided by a syndicate of relationship banks. In addition, the bank syndicate has provided a term loan of EUR 400 million, also maturing in 2023.
Elkem has a loan facility of NOK 2,000 million to secure refinancing of loan maturities in 2021. The facility is undrawn and has a tenor of 3 years from July 2020.
Elkem has a loan of EUR 40 million from Nordic Investment Bank (NIB) with a tenor of eight years from 2015. The loan is repaid in semi-annual instalments, ending on 23 October 2023.
Elkem ASA has issued a series of floating and fixed rate loans in the Schuldschein market, amounting to EUR 215 million, all senior unsecured loans. Amount and pricing are as follows
- EUR 28.5 million, maturing in 2021, floating rate 6-months Euribor + 0.95% p.a.
- EUR 125.5 million, maturing in 2022, floating rate 6-months Euribor + 1.10% p.a.
- EUR 21 million, maturing in 2024, floating rate 6-months Euribor + 1.40% p.a.
- EUR 15 million, maturing in 2024, fixed coupon rate of 1.816% p.a.
- EUR 25 million, maturing in 2025, floating rate 6-months Euribor + 1.55% p.a.
Elkem has issued the following bond;
|Stock exchange||An application will be made for the bond to be listed at Oslo Børs|
|Amount||NOK 1,750 million|
|Coupon rate||3m Nibor+1.25 % p.a.|
|Issue date||6 December 2018|
|Maturity date||6 December 2021|
In addition, Elkem has various local financing in China, mainly consisting of short-term bank facilities.
For more details regarding outstanding amounts and maturity profile, please refer to Elkem’s latest quarterly report and presentation.
Elkem has two financial covenants in certain of its external loan agreements;
- Interest Cover Ratio - shall exceed 4.00:1.00
- Equity Ratio - shall be equal to or more than 30 %.
These financial covenants apply to bank facilities at Elkem ASA level, NIB and Schuldschein loans. No financial covenants apply to local bank financing in China or NOK bond financing.