[29] Financial liabilities

The financial liabilities reported by the KION Group as at 31 December 2018 essentially comprised interest-bearing liabilities to banks and the promissory notes. The liabilities to banks were predominantly attributable to the loan for the financing of the Dematic acquisition and liabilities under the syndicated loan agreement.

> TABLE 095 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), originally for €1,500.0 million, with a syndicate of international banks on 28 October 2015. As at 31 December 2018, the SFA consisted solely of a revolving credit facility of €1,150.0 million. This has a variable interest rate and, following the agreement in 2018 of an extension to its term, it can be drawn down until February 2023. As at 31 December 2018, the amount drawn down was €101.8 million (31 December 2017: €184.7 million, which included other loan liabilities and contingent liabilities). The drawdowns under the revolving credit facility are 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. As at 31 December 2018, it consisted solely of a floating-rate loan in a nominal amount of €600.0 million that is due to mature in October 2021.

At the end of 2017, this loan had a nominal amount of €1,000.0 million. It was partly repaid in 2018 using the funds from the issuance of a further promissory note of €200.0 million and using cash received from operating activities. As a result of the early repayment, previously deferred borrowing costs of €1.9 million were recognised under financial expenses.

Promissory notes

In 2018, a promissory note was issued in a nominal amount of €200.0 million. It will mature in June 2025 and has both floating-rate and fixed coupons. The resulting funds were used to repay part of the floating-rate loan under the AFA. Directly attributable transaction costs of €0.5 million were incurred in connection with the issuance of the promissory note. These were deducted from the fair value on initial recognition and will be expensed over subsequent periods. The KION Group has entered into an interest-rate derivative to hedge the risk of a change in the fair value of the tranche with a fixed coupon. This is accounted for as a fair value hedge (see note [41]).

The promissory note issued in 2017 in a nominal amount totalling €1,010.0 million is divided into three tranches with varying 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 this promissory note resulted in directly attributable transaction costs of €3.2 million. These were deducted from the fair value of each tranche on initial recognition and will be expensed over subsequent periods. The KION Group has entered into a number of interest-rate derivatives in order to hedge the interest-rate risk resulting from the floating-rate tranches of this promissory note. The interest-rate derivatives are accounted for as cash flow hedges (see note [41]).

The SFA, AFA and promissory notes are not collateralised. KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the SFA and AFA and it is the borrower in respect of all the payment obligations resulting from the promissory notes.

> TABLE 096 gives details of the changes in financial liabilities and lists the applicable terms and conditions.

Covenants

Among other stipulations, the contractual terms of the SFA, AFA and promissory notes set out certain covenants. In addition, there is a financial covenant that involves ongoing testing of adherence to a defined maximum level of leverage. 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 was the case in 2017.