[30] Financial liabilities

The financial liabilities reported by the KION Group as at 31 December 2016 essentially comprised interest-bearing liabilities to banks, which were predominantly attributable to the bridge loan for the financing of the Dematic acquisition and liabilities under the syndicated loan agreement.

> TABLE 088 shows the contractual maturity structure of the financial liabilities.

Liabilities to banks

Senior facilities agreement

KION GROUP AG signed a syndicated loan agreement (senior facilities agreement, SFA) totalling €1,500.0 million with a syndicate of international banks on 28 October 2015. On 25 January 2016, the Executive Board of KION GROUP AG decided to overhaul the financing structure of the KION Group by repaying the syndicated loan dated 23 December 2006, which took the form of a revolving credit facility of €1,243.0 million, and the KION Group corporate bond of €450.0 million that was issued in 2013 and was due to mature in 2020. The associated repayment was made on 15 February 2016 using funds drawn down under the SFA. The SFA can be used for general business purposes and enables the KION Group to obtain finance on far more favourable terms than has been possible in the past.

The SFA comprises a revolving credit facility of €1,150.0 million maturing in February 2021 and a fixed-term tranche of €350.0 million maturing in February 2019 that has been fully drawn down. Both the revolving credit facility and the fixed-term tranche have a variable interest rate. As at 31 December 2016, an amount of €225.3 million had been drawn down from the revolving credit facility, which includes other loan liabilities and contingent liabilities. The drawdowns under the revolving credit facility have been classified as short term.

Arrangement of the revolving credit facility of €1,150.0 million resulted in directly attributable transaction costs of €3.8 million. The transaction costs are recognised as prepaid expenses under current financial assets and expensed over the term of the credit facility. Arrangement of the fixed-term tranche of €350.0 million resulted in directly attributable transaction costs of €1.3 million. The transaction costs were deducted from the fair value of this tranche on initial recognition and will be expensed over subsequent periods.

KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the SFA. The SFA is not collateralised, as is typical in the current market environment for companies that are on the cusp of an investment-grade rating. Following repayment of the syndicated loan from 23 December 2006, all collateral furnished under the previous loan agreement has now been released.

Acquisition facilities agreement

On 4 July 2016, KION GROUP AG reached agreement with a group of banks on a bridge loan to finance the acquisition of Dematic (acquisition facilities agreement, AFA), originally in an amount of €3,000.0 million. This bridge loan is to be refinanced partly by long-term capital-market and bank debt and partly by equity. KION GROUP AG implemented a capital increase in July 2016 that generated gross proceeds of €459.3 million (see also note [28]). The agreed financing volume was reduced by the proceeds from the issue of shares and, when the AFA was drawn down for the first time on 1 November 2016, amounted to €2,543.2 million.

The drawdown under the AFA comprises a total of three fixed-term, variable-rate tranches: tranche A2 has a value of €343.2 million maturing in February 2018 and tranche B a value of €1,200.0 million maturing in November 2018; the third tranche is a further loan of €1,000.0 million maturing in November 2021. The transaction costs directly assignable in connection with each tranche amounted to €1.3 million for tranche A2, €4.4 million for tranche B and €7.7 million for the loan of €1,000.0 million. The transaction costs were deducted from the fair value of each tranche on initial recognition and will be expensed over subsequent periods.

KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the AFA. No collateral has been furnished in connection with the AFA.

Changes in net financial debt

The KION Group uses its net financial debt as a key internal figure for analysing the changes in its financial liabilities. Net financial debt is defined as the difference between financial liabilities and cash and cash equivalents.

The breakdown of the KION Group’s net financial debt as at 31 December 2016 is shown in > TABLE 089.

> TABLE 090 gives details of the changes in financial liabilities and lists the applicable terms and conditions.

Financial covenants

Among other stipulations, the contractual terms of the SFA and AFA require compliance with certain covenants. They also contain a financial covenant that requires adherence to a maximum level of leverage (the ratio of financial liabilities to EBITDA). Non-compliance with the covenants may, for example, give lenders the right to terminate the SFA and AFA.

The financial covenant is reviewed every quarter. All the covenants and the financial covenant were complied with in the past financial year, as had been the case in 2015.

The KION Group works continuously to optimise the financing of the Group (see note [50]).