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Note 21 Borrowings
In December Stora Enso Oyj issued a five year SEK 4.3 billion bond in order to restructure the Company’s debt portfolio and take advantage of favourable market conditions; the bond pays a fixed coupon of 3.875%. In June the Group created a new ten year bond by offering to exchange its existing EUR 850 million 2007 bond; EUR 475 million of notes were exchanged, 55.9% of the total, the transaction extending the average maturity of all debt by one year.
In January 2005 Stora Enso Oyj signed a five year EUR 1.75 billion multi-currency revolving credit facility agreement which replaced a previous EUR 2.5 billion facility signed in 2003.
Borrowings have various maturities, the latest being in 2023, and have either fixed or floating interest rates ranging from 1.0% (1.0%) to 9.99% (9.99%). The majority of Group loans are denominated in Euros, the principal other currencies being Swedish Kronas and US Dollars. At 31 December 2004 the Group’s unused committed credit facilities totalled EUR 2 712.7 (EUR 2 500.0) million, of which EUR 0.0 (EUR 0.0) million was classified as short-term.
In 2004 Stora Enso bought back bonds with a nominal value of SEK 469 (EUR 52.6) million, resulting in a loss in financial items of SEK 1 (EUR 0.1) million.
In 2003 Stora Enso bought back bonds with a nominal value of SEK 110 (EUR 12.1) million at par and EUR 22.1 million resulting in a loss of EUR 0.7 million.
In 2002 Stora Enso bought back bonds with a nominal value of SEK 797 (EUR 87.1) million, resulting in a loss in financial items of SEK -5 (EUR –0.5) million, USD 35.0 (EUR 37.0) million at par and EUR 88.0 million resulting in a loss of EUR 2.2 million.
Net interest-bearing liabilities are designated as such on the Balance Sheet and amounted to EUR 3 051.4 (EUR 3 919.0) million at 31 December 2004; most of this net liability is represented by long-term debt. The breakdown of net interest-bearing liabilities and operating capital by principal country/area is detailed below:
Country/Area Breakdown
| As at 31 December | |||||||
| 2002 | 2003 | 2004 | 2002 | 2003 | 2004 | ||
| EUR million | Net interest-bearing Liabilities | Operating Capital | |||||
| Euro area | 337.7 | 975.1 | 1 950.7 | 6 243.3 | 6 236.7 | 6 299.7 | |
| Sweden | 1 018.2 | 1 183.7 | -131.4 | 2 773.8 | 3 630.4 | 2 131.6 | |
| USA | 1 693.8 | 1 515.7 | 1 131.7 | 3 157.1 | 2 457.1 | 2 346.8 | |
| Canada | -35.4 | 19.4 | 29.5 | 447.9 | 492.5 | 476.2 | |
| China | 176.0 | 129.2 | 107.8 | 203.6 | 157.2 | 147.0 | |
| UK | -25.4 | -22.5 | -34.3 | 24.9 | 18.9 | 2.8 | |
| Other | 101.9 | 118.4 | -2.6 | 249.0 | 555.6 | 766.2 | |
| Total | 3 266.8 | 3 919.0 | 3 051.4 | 13 099.6 | 13 548.4 | 12 170.3 | |
Long-term Debt
| As at 31 December | |||||||
| 2002 | 2003 | 2004 | 2002 | 2003 | 2004 | ||
| EUR million | Repayable within 12 Months | Repayable after 12 Months | |||||
| Bond loans | 219.3 | 232.9 | 3.9 | 3 204.9 | 2 689.6 | 2 762.4 | |
| Loans from credit institutions | 61.6 | 113.3 | 89.7 | 653.0 | 540.1 | 403.5 | |
| Financial lease liabilities | 16.3 | 8.0 | 8.0 | 655.9 | 167.0 | 155.5 | |
| Other long-term liabilities | 9.3 | 5.3 | 0.5 | 11.4 | 7.9 | 6.7 | |
| Total Long-term Debt | 306.5 | 359.5 | 102.1 | 4 525.2 | 3 404.6 | 3 328.1 | |
Repayment Schedule of Long-term Debt
| As at 31 December | |||||||
| EUR million | 2005 | 2006 | 2007 | 2008 | 2009 | 2010+ | Total |
| Bond loans | 3.9 | 305.4 | 423.3 | 165.1 | 471.5 | 1 397.1 | 2 766.3 |
| Loans from credit institutions | 89.7 | 34.6 | 154.5 | 49.9 | 31.5 | 133.0 | 493.2 |
| Financial lease liabilities | 8.0 | 8.0 | 7.8 | 7.5 | 7.5 | 124.7 | 163.5 |
| Other long-term liabilities | 0.5 | 3.2 | 0.3 | 0.2 | 0.1 | 2.9 | 7.2 |
| Total Long-term Debt | 102.1 | 351.2 | 585.9 | 222.7 | 510.6 | 1 657.7 | 3 430.2 |
| Current Liabilities: Repayable within the next 12 months | 102.1 | ||||||
| Long-term Liabilities: Repayable after 12 months | 3 328.1 | ||||||
Carrying value of the Group short-term financial liabilities is considered to approximate their fair value. However, the fair value of long-term term debt, exclusive of the current part, has a value of EUR 3 600.9 (EUR 3 626.1) million as against a carrying value of EUR 3 328.1 (EUR 3 404.6) million.
* Parent company liabilities The US finance lease liability in 2003 consisted of EUR 446.2 million of principal and a provision of EUR 53.9 million for termination costs.Bonds Loans in Long-term Debt
Issue/
Maturity
DatesDescription of Bond
Interest
Rate %Currency
of
BondNominal
Value
IssuedOutstanding
As at 31 December
Carrying Value
As at 31 December
2004
2003
2004
2003
2004
Currency million
EUR million
Fixed Rate
1991'2006
Series C Senior Notes 2006 *
9.99
USD
50.4
37.3
30.1
29.6
22.1
1993'2019
Series C Senior Notes 2019 *
8.60
USD
50.0
50.0
50.0
39.6
36.7
1996'2006
Swedish Medium Term Note *
7.90
SEK
470.0
470.0
309.0
61.3
34.4
1997'2007
Senior Notes Series B 2007
6.82
USD
102.0
102.0
102.0
86.3
75.2
1997'2009
Senior Notes Series C 2009
6.90
USD
48.5
48.5
48.5
41.3
35.0
1997'2012
Senior Notes Series D 2012
7.00
USD
22.5
22.5
22.5
19.2
16.3
1997'2017
Senior Notes Series E 2017
7.14
USD
23.0
23.0
23.0
17.3
16.1
1997'2017
Euro Medium Term Note *
4.105
JPY
10 000
10 000
10 000
74.0
71.6
1998'2008
Swedish Medium Term Note *
4.00
SEK
264.4
250.0
250.0
28.8
27.3
1998'2009
Senior Notes Series F 2009
6.93
USD
30.0
30.0
30.0
25.4
21.6
1998'2018
Senior Notes Series G 2018
7.24
USD
65.0
65.0
65.0
47.9
44.6
1998'2023
Senior Notes Series H 2023
7.30
USD
65.0
65.0
65.0
47.1
43.8
1999'2006
Swedish Medium Term Note *
5.90
SEK
500.0
43.0
43.0
4.7
4.8
1999'2008
Swedish Fixed Real Rate *
4.00
SEK
105.3
100.0
100.0
9.7
11.5
2000'2006
Euro Medium Term Note * (1)
6.25
SEK
2 000.0
2 000.0
2 000.0
231.1
31.9
2000'2007
Euro Bond 6.375% Notes 2007 *
6.375
EUR
850.0
850.0
374.6
846.0
372.6
2000'2007
Euro Medium Term Note *
6.90
SEK
200.0
200.0
200.0
22.0
22.2
2001'2006
Euro Medium Term Note *
6.25
SEK
2 000.0
2 000.0
2 000.0
230.8
218.9
2001'2011
Global 7.375% Notes 2011 *
7.375
USD
750.0
750.0
750.0
690.0
588.0
2004'2014
Euro Medium Term Note *
5.125
EUR
517.6
-
517.6
-
492.7
2004'2009
Swedish Medium Term Note *
3.875
SEK
4 300.0
-
4 300.0
-
474.1
Loans matured and extinguished in 2004
228.4
-
Total Fixed Rate Bond Loans
2 780.5
2 661.4
Floating Rate
1997'2007
Euro Medium Term Note *
Libor+0.35
FIM
110.0
110.0
110.0
18.5
18.5
1998'2008
Euro Medium Term Note *
Libor+0.35
USD
30.0
30.0
30.0
23.8
22.0
1998'2008
Euro Medium Term Note *
Libor+0.33
USD
40.0
40.0
40.0
31.7
29.4
2000'2007
Swedish Medium Term Note *
Euribor+0.75
EUR
10.0
10.0
10.0
10.0
10.0
2000'2010
Euro Medium Term Note *
Euribor+0.8
EUR
25.0
25.0
25.0
25.0
25.0
Loans matured and extinguished in 2004
33.0
-
Total Floating Rate Bond Loans
142.0
104.9
Total Bond Loans
2 922.5
2 766.3
(1) SEK 2 000 million is legally outstanding, but the Company holds Notes to the value of SEK 1 722 million leaving SEK 278 million held externally.
Interest-bearing Liabilities
As at 31 December
EUR million
2002
2003
2004
Short-term loans
272.5
929.1
543.3
Derivative financial instruments (Note 24)
71.4
-19.1
54.1
US finance lease terminal liability (see below and Note 7)
-
500.1
-
343.9
1 410.1
597.4
Group short-term loans are principally denominated in euros (50.9%), SEK (34.4%) and Chinese renminbi (12.8%), with maturities of between 3 days and 11 months. Short-term loans also include commercial paper with applicable weighted average interest rates of 2.2% (2.2%).
Finance Lease Liabilities
At 31 December 2004 Stora Enso had a small number of finance leasing agreements for machinery and equipment for which capital costs of EUR 126.5 (EUR 142.3) million were included in machinery and equipment; the depreciation thereon was EUR 10.7 (EUR 35.7) million. The aggregate leasing payments for the year amounted to EUR 17.4 (EUR 35.1) million, the interest element being EUR 17.3 (EUR 30.2) million. No new leasing commitments were entered into in 2004.
In 2003 a new leasing commitment of EUR 21.5 million relating to buildings was incurred by the Danish merchant subsidiary, the only lease termination being as detailed below.
At 31 December 2002 the Group’s finance lease liabilities amounted to EUR 672.2 against a capitalised Fixed Asset value of EUR 614.4 million. The principal lease liability consisted of a portfolio of 1996 UK finance leases to finance PM16 at Wisconsin Rapids and PM26 at Biron, but by 31 December 2003 Stora Enso North America Inc was in the process of terminating these leases as a consequence of changes in the interpretation of UK leasing tax rules (see Note 7). All amounts due under these leases were no longer shown under Finance Lease Liabilities, but were instead shown on the Balance Sheet under current Interest-bearing Liabilities; see above. The transaction was closed on 2 March 2004 when USD 650.5 (EUR 522.9) million was passed over in full and final settlement.
Finance Lease Liabilities
| As at 31 December | |||
| EUR million | 2002 | 2003 | 2004 |
| Minimum lease payments | |||
| Less than 1 year | 78.1 | 19.3 | 17.4 |
| 1-2 years | 78.9 | 21.7 | 17.4 |
| 2-3 years | 75.7 | 17.8 | 17.4 |
| 3-4 years | 48.4 | 17.8 | 17.4 |
| 4-5 years | 49.9 | 17.8 | 17.4 |
| Over 5 years | 841.2 | 222.6 | 176.0 |
| 1 172.2 | 317.0 | 263.0 | |
| Future finance charges (see below) | -500.0 | -142.0 | -99.5 |
| Present Value of Finance Lease Liabilities | 672.2 | 175.0 | 163.5 |
| Present Value of Finance Lease Liabilities | |||
| Less than 1 year | 74.9 | 18.5 | 15.5 |
| 1-2 years | 67.1 | 20.2 | 14.7 |
| 2-3 years | 59.4 | 14.9 | 13.8 |
| 3-4 years | 35.0 | 13.7 | 13.0 |
| 4-5 years | 33.5 | 12.6 | 12.3 |
| Over 5 years | 402.3 | 95.1 | 94.2 |
| 672.1 | 175.0 | 163.5 | |
Annual repayments of principal are shown above in the Repayment Schedule of Long-term Debt.
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