The Borregaard Group uses several sources to diversify its long-term funding. External borrowing is centralised at parent level, and capital needs in subsidiaries mainly covered by internal loans or equity.
Borregaard has long-term revolving credit facilities totalling NOK 1,500 million with maturities ranging from 2025 to 2027. Equal portions of NOK 500 million have been provided by each of the three banks Handelsbanken, DNB and SEB. The long-term revolving credit facilities are unsecured (negative pledge), but contain some limitations on new indebtedness beside change of control and cross-default provisions. The following financial covenants are included:
- Leverage ratio1 shall not exceed 3.50
Borregaard has two term loans with the Nordic Investment Bank: A EUR 40 million loan with a tenor of ten years from 2014 (maturity 2024), with a grace period of three years, and a USD 50 million loan with a tenor of ten years from 2022 (maturity 2032), with a grace period of four years. Financial covenants are similar to those applicable for the long-term revolving credit facilities.
To finance completion of the USD 110 million greenfield lignin operations in Florida, LignoTech Florida LLC entered into a USD 60 million loan agreement with SEB in 2017. The loan facility is guaranteed 70% by the Norwegian Export Credit Guarantee Agency (GIEK) and has a tenor of eight and a half years from project completion. The owners, Borregaard (55%) and Rayonier Advanced Materials (45%), will guarantee the loan facility on a pro rata basis until relevant financial conditions are met.
For liquidity and cash management purposes, Borregaard has a multi-currency overdraft facility of 125 million NOK linked to its international cash pool with DNB, a 100 million NOK overdraft facility linked to its cash pool with Handelsbanken and an intra-day facility of NOK 75 million with Nordea related to salary payments.
For more details, see Annual Report for 2021 pages 118 and 119 (Notes 26 and 27 to the consolidated financial statements).
1Non-GAAP measure, see Annual Report for 2021 page 142 for definition