Establishment of SCA Property Group
Key Hedging Policies and Debt Covenants - Appendix B
Hedging Policies
Key Debt Covenants
•
Interest Rate Exposure:
•
-
-
• Target fixed interest rate exposure of 50 to 100% of drawn borrowings
Forecast assumes 90% of initial drawn debt is hedged and 50% of
debt drawn to fund the DMA payments
•
Approximately 82% of drawn facilities hedged at fixed rates
Settlement Foreign Exchange Exposure:
-
Forecast assumes an AUD/NZD exchange rate of A$1.00 = NZ$1.25
Gearing (1)
ICR (2)
Priority Debt (3)
Secured Finance Debt (4)
Total Tangible Assets Ratio (5)
Covenant
< 50%
> 2.0x
<10%
<10%
> 90%
40
40
•
Capital Foreign Exchange Exposure:
Debt Drawdown Profile
Policy of matching foreign currency assets with liabilities to create a
natural hedge and use of derivatives where appropriate
-
New Zealand acquisitions will be 60% debt funded in New Zealand
Dollar debt
($m)
At 7 months 6 months 6 months
Allotment to Jun-13 to Dec-13 to Jun-14
Total
DMA
83.6
34.6
16.4
134.5
-
Net exposure of up to 40% of acquisition value
•
Income Foreign Exchange Exposure:
Drawdown
Total Debt
Policy of matching a portion of foreign currency income with expenses
(including interest expenses) to create a natural hedge and use of
derivatives where appropriate
Cash
355.3
5.0
438.9
473.5
489.8
489.8
5.0
Total
1,278.9
1,413.4
Assets
-
Forecast assumes New Zealand Dollar income exposure will be
managed by off-setting interest on NZD borrowing against New
Zealand operating income
Gearing (1)
27%
34%
(1)
Defined as the ratio of total finance debt net of cash and cash equivalents to total tangible assets, excluding mark-to-market derivatives
Interest cover ratio defined as the ratio of EBIT (after adjusting for amortisation and non-cash items) to net interest expense under the Debt Facility
(3)
(4)
Defined as the ratio of Priority Debt to total assets; Priority Debt is any finance debt raised by SCA Property Group entities which do not guarantee the Debt Facility
Defined as the ratio of secured finance debt to total tangible assets
(5)
Defined as the ratio of total tangible assets of SCA Property Group and guarantors of the Debt Facility (on a non-consolidated basis) to the total tangible assets of SCA Property GroupView entire presentation