REGISTRATION DOCUMENT - Bourbon

3RiskMANAGEMENT REPORTfactorsIn order to meet the Group’s increased need for fi nancing, the€320 million syndicated loan taken out in 2005 and the one for€450 million taken out in 2007, reiterated the support in place forthe Group’s “BOURBON 2015 Leadership Strategy” growth plan, bylifting the caps on fi nancial ratios and removing earlier requirementsrelating to the net operating debts (NOD = net debts excludingprepayments on orders of vessels under construction) to EBITDAratio and the net debt to equity ratio. These two multilateral loanswere secured by collateral, replacing the mortgage promises givenwhen the loans were signed, on some of the BOURBON fl eet’svessels, details of which appear in note 5.1 “Contractual obligationsand other off-balance sheet commitments” of the notes to theconsolidated fi nancial statements.Likewise, the €318 million syndicated loan, signed in 2009, removedthe cap on the net operating debts (NOD = net debts excludingprepayments on orders of vessels under construction) to EBITDAratio. The ratio of net debt to equity of less than 1.90 still applies.This multilateral loan was also secured by collateral, replacing themortgage promises given when the loans were signed, on some ofthe BOURBON fl eet’s vessels, details of which appear in note 5.1“Contractual obligations and other off-balance sheet commitments”of the notes to the consolidated fi nancial statements.In the case of some bilateral loans, mainly those of a tax leasefi nancing type, of which a total of €111.7 million was still outstandingat the end of 2011, the tax lease fi nancing contracts specify a netdebt to equity ratio of less than 1.90 and a “net operating debts toEBITDA” ratio of less than 5.0 for fi scal years 2011 and 2012, thenless than 4.5 for fi scal years 2013 and 2014, and 4.0 in subsequentyears.No early settlements were required on any of our fi nancialcommitments as of December 31, 2011. Likewise there were nocross defaults between Group entities.Furthermore, there were no instances of early termination of loancontracts due to a new circumstance (termination event) linked to achange of control of the debtor as of December 31, 2011.As of December 31, 2011, BOURBON was in compliance with itsfi nancial covenants, i.e. its fi nancial commitments with regard toloan contracts.Short-term lines of creditIn addition, the Group has unused short-term credit lines totalingaround €44 million as of December 31, 2011. The Group had cashassets of €230 million as of December 31, 2011.Cash management is coordinated at the Group’s operatingheadquarters. Financière Bourbon, a partnership organized as a cashclearing house, offers its services to most of the Group’s operatingsubsidiaries. These entities, under a cash agreement with FinancièreBourbon, receive active support in the management of their cashfl ow, their foreign currency and interest rate risks, their operatingrisks and their short and medium-term debt, in accordance with thevarious laws in force locally.BOURBON does not have a fi nancial rating from a specialist agency.4.4.3 Market risksMarket risks include the Group’s exposure to interest rate risks,foreign exchange risks, risks on equities and risks on supplies.Interest rate riskThe Group’s exposure to the risk of interest rate fl uctuations isrelated to the Group’s medium and long-term variable rate fi nancialdebt. BOURBON regularly monitors its exposure to interest raterisk. This is coordinated and controlled centrally. It comes underthe responsibility of the Vice President-Finance who reports to theExecutive Vice President Chief Financial Offi cer.The Group’s policy consists of managing its interest rate expenseby using a combination of fi xed-rate and variable-rate borrowing.In order to optimize the overall fi nancing cost, the Group sets upinterest rate swaps under which it exchanges, at pre-determinedintervals, the difference between the amount of fi xed-rate interestand the amount of variable-rate interest calculated on a pre-defi nednominal amount of borrowing.These swaps are assigned to hedge the borrowings. As ofDecember 31, 2011, after taking account of interest rate swaps,approximately 50% of the Group’s medium or long-term debt wascontracted at a fi xed interest rate.44BOURBON - 2011 Registration Document