[30] Financial liabilities

Senior facilities agreement

KION GROUP AG signed a syndicated loan agreement (senior facilities agreement, SFA) of originally €1,500.0 million with a syndicate of international banks on 28 October 2015. The SFA comprised a revolving credit facility of €1,150.0 million and a fixed-term tranche of €350.0 million. The fixed-term tranche of €350.0 million, which had a variable interest rate and was due to mature in February 2019, was repaid in full ahead of schedule in 2017. As a result of the early repayment, deferred borrowing costs of €0.9 million were recognised under financial expenses.

On the reporting date, the SFA consisted solely of the revolving credit facility, which has a variable interest rate and will mature in February 2022. As at 31 December 2017, an amount of €184.7 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.

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 was refinanced by means of two corporate actions in 2017, which means that the liabilities under the AFA as at 31 December 2017 consisted solely of a floating-rate loan of €1,000.0 million that is due to mature in October 2021.

The amount drawn down under the AFA as at 31 December 2016 was €2,543.2 million and was divided into three variable-rate tranches repayable as bullet payments on maturity: tranche A2 of €343.2 million, tranche B of €1,200.0 million and the loan of €1,000.0 million. Tranche A2 and tranche B of the AFA were repaid in full in 2017. The funds for the repayment were provided by the promissory note issued in the first quarter of 2017 with a nominal amount totalling €1,010.0 million and the capital increase carried out in May 2017, which generated gross proceeds of €602.9 million (see also note [28]). In connection with the early repayment of these tranches, previously deferred borrowing costs of €2.5 million were recognised under financial expenses.

The promissory note issued in 2017 in an amount of €1,010.0 million is divided into three tranches with different maturities and floating-rate or fixed coupons: a tranche of €746.0 million maturing in May 2022, a tranche of €236.5 million maturing in April 2024 and a tranche of €27.5 million maturing in April 2027. Issuance of the promissory note resulted in directly attributable transaction costs of €3.1 million. These were deducted from the fair value of each tranche on initial recognition and will be expensed over subsequent periods.

The KION Group entered into a number of interest-rate derivatives in order to hedge the interest-rate risk resulting from the floating-rate tranches of the promissory note. The interest-rate derivatives are accounted for as cash flow hedges (see also note [40]).

The SFA, AFA and promissory note are not collateralised. KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the SFA and AFA.

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 2017 is shown in > TABLE 089.

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

Among other stipulations, the contractual terms of the SFA, AFA and promissory note set out certain covenants. In addition, there is a financial covenant that involves ongoing testing of adherence to a defined maximum level of leverage (the ratio of financial liabilities to EBITDA). Non-compliance with the covenants or with the defined maximum level of leverage as at a particular reporting date may potentially give lenders a right of termination or lead to an increase in interest payments.

All covenants were complied with in the past financial year, as had been the case in 2016.