22. Loans and borrowings

To finance in part the acquisition of Scholle IPN and the repayment of the acquired Scholle IPN external loans, the Group accessed an unsecured bridge loan facility of €800 million on 27 May 2022. On 30 June 2022, the Company issued unsecured Schuldscheindarlehen (“SSD”, a private German debt placement) totalling €650 million. Of this amount, €555 million was used on 30 June 2022 to reduce the unsecured bridge loan facility. The remaining €95 million was used to partly finance the consideration for Evergreen Asia. On 28 July 2022, the Company entered into a new unsecured credit facility, consisting of a US Dollar-denominated term loan ($270.0 million). The major part of the proceeds from the term loan was used to repay the remaining portion of the unsecured bridge loan facility. Refer also to notes 4, 24 and 27.

Apart from the borrowings taken up in June and July 2022, the Group’s loans and borrowings mainly consist of senior unsecured Euro-denominated notes and senior unsecured credit facilities. The senior unsecured credit facilities consist of one Euro-denominated term loan and a multi-currency revolving credit facility. Liabilities under lease contracts where the Group is the lessee are also included in loans and borrowings.

Composition of loans and borrowings

The table below shows the carrying amount of the Group’s loans and borrowings.

Senior unsecured notes

The Group has two issues of senior unsecured notes from June 2020 at an aggregate amount of €1,000 million. The notes are traded on the Global Exchange Market of Euronext Dublin. The table below provides an overview of the main terms.

Interest on the notes is paid semi-annually. The notes can be redeemed in whole or in part prior to 18 March 2023 for the 2023 notes, and prior to 18 March 2025 for the 2025 notes, at par plus a make-whole premium. The notes can be redeemed in whole or in part on or after 18 March 2023 for the 2023 notes, and on or after 18 March 2025 for the 2025 notes, at a price equal to 100% of their respective principal amounts.

The obligations under the notes are guaranteed on a senior subordinated basis by the Company on a stand-alone basis. Until September 2022, when the guarantor structure changed, the obligations under the notes were guaranteed by Group subsidiaries. The indenture governing the notes contains customary restrictive covenants and customary events of default. The Group was in compliance with all covenants and there were no events of default as of 31 December 2022 and 31 December 2021.

The Group has signed a €400 million unsecured bridge loan facility agreement (see note 4). This facility may be used to repay the €450 million of the notes due in June 2023.

Senior unsecured credit facilities (Euro term loan and revolving credit facility)

The Group’s senior unsecured credit facilities from June 2020 consist of one Euro-denominated term loan and a committed multi-currency revolving credit facility. The table below provides an overview of the main terms.

Interest on the Euro term loan is paid semi-annually. The margin of 1.00% is subject to semi-annual adjustments based on the Group’s net leverage (as defined in the credit agreement). The margin is also subject to a maximum 0.05% per annum increase or decrease based upon the achievement of certain annual sustainability-linked targets (greenhouse gas emissions, or “GHG” emissions, and rankings per the EcoVadis Report). No repayments of the term loan are due prior to maturity. The Group has the right to repay the term loan in whole or in part without premium or penalty.

The amount available under the multi-currency revolving credit facility is €295.1 million as of 31 December 2022 (€294.2 million as of 31 December 2021), due to €4.9 million (€5.8 million as of 31 December 2021) in letters of credit being outstanding under an ancillary facility. The Group pays a fee for the undrawn revolver amount per year for the right to use the revolving credit facility (35% of the margin percentage on an annualised basis, applied to the undrawn balance of the revolving credit facility).

The obligations under the senior unsecured credit facilities are guaranteed by the Company on a stand-alone basis. Until September 2022, when the guarantor structure changed, the obligations under the senior unsecured credit facilities were guaranteed by Group subsidiaries. The credit agreement contains customary positive and negative covenants as well as customary events of default. The Group was in compliance with all covenants and there were no events of default as of 31 December 2022 and 31 December 2021.

Unsecured bridge loan facility

On 27 May 2022, the Group accessed an unsecured bridge loan facility of €800 million, with an interest rate of Euribor+0.8% and a Euribor floor of 0.00%.

On 30 June 2022, the Group repaid €555 million of the bridge loan facility using part of the proceeds from the SSD (see below), without premium or penalty. On 29 July 2022, the Group repaid the remaining €245 million of the bridge loan facility using the majority of the proceeds from the new US Dollar term loan (see below), without premium or penalty.

Part of the proceeds from the bridge loan facility was used to finance the €415.5 million cash portion of the consideration for Scholle IPN that was transferred to CLIL on 1 June 2022. The remaining part of the proceeds was used to repay external Euro and US Dollar loans of Scholle IPN of €387.7 million. See notes 23 and 27 for the impact of a deal-contingent derivative relating to the repayment of the US Dollar loan.

Unsecured SSD

On 30 June 2022, the Group issued unsecured Schuldscheindarlehen (“SSD”, a private German debt placement) totalling €650 million. Directly attributable transaction costs in the form of arrangement and advisory fees for the six SSD tranches amounted to €2.6 million. The table below provides an overview of the main terms of the six SSD tranches.

The largest SSD tranche amounts to €423.5 million and is due in June 2027. The interest rate is Euribor+1.3%, with a Euribor floor of 0.00%.

Interest on the SSD tranches with variable interest rates is paid semi-annually, while interest on the SSD tranches with fixed interest rates is paid annually. The margin on the SSD tranches is subject to a maximum 0.05% per annum increase or decrease based on the achievement of certain annual sustainability-linked targets (with reference to the Group’s EcoVadis score). The Group has the right to repay before maturity the three SSD tranches with variable interest rates in whole or in part, without premium or penalty. The three tranches with fixed interest rates can be repaid early against the payment of a make-whole premium.

The obligations under the SSD are guaranteed by the Company on a stand-alone basis. The SSD agreement contains customary events of default. There were no events of default as of 31 December 2022.

Unsecured credit facility (US Dollar term loan)

On 28 July 2022, the Group entered into a new unsecured credit facility, consisting of one US Dollar-denominated term loan of $270.0 million. Directly attributable transaction costs in the form of arrangement and advisory fees for the US Dollar term loan amounted to €0.7 million. The table below provides an overview of the main terms.

Interest on the US Dollar term loan is payable quarterly. The margin of 1.25% is subject to half-yearly adjustments based on the Group’s net leverage (as defined in the credit agreement). The Group has entered into an interest rate swap to hedge the interest rate cash flow exposure relating to the term loan (see also notes 25 and 33). No repayments of the term loan are due prior to maturity. The Group has the right to repay the term loan in whole or in part at the end of each interest period without premium or penalty.

The obligations under the US Dollar term loan are guaranteed by the Company on a stand-alone basis. The credit agreement contains customary positive and negative covenants as well as customary events of default. The Group was in compliance with all covenants and there were no events of default as of 31 December 2022.

Unsecured credit facility

In March 2021, the Group accessed an unsecured credit facility of €100.0 million. Cash from the new credit facility was drawn in two tranches of €50.0 million each on 31 March 2021 (at an interest rate lower than the applicable interest rate on the revolving credit facility). The two tranches, as per the agreement, were repaid in September and December 2021.

The amounts drawn in March 2021, together with available cash, were used to repay external loans of €139.5 million of one of the former joint ventures in the Middle East. The difference of €3.7 million between the carrying amount of the loans as of the repayment date and the amount paid is presented as part of the net finance expense (see note 23).

Lease liabilities

A maturity analysis of the Group’s lease liabilities is provided below.

The Group’s lease liabilities mainly relate to leases of office buildings, production-related buildings and equipment, warehouses and cars. See also note 13.

Note 13 includes information about lease contracts to which the Group has committed but where the lease has not yet commenced.

Changes in liabilities arising from financing activities

The following two tables present changes in liabilities arising from financing activities.

The main transactions in the year ended 31 December 2022 relate to the drawing and subsequent repayment of an unsecured bridge loan facility, the repayment of the external loans of Scholle IPN, the issue of SSD and the drawing of a new US Dollar term loan. The main transactions in the year ended 31 December 2021 related to the drawing and subsequent repayment of two tranches under a new credit facility as well as the repayment of external loans of one of the former joint ventures in the Middle East.