The balances of the “Bonds and other negotiable securities” and “Debts with credit institutions” items for the financial year were as follows:
The effect of debt movement on the Group’s cash flows as reflected in the cash flow statement is affected by non-cash movements generated by exchange rate differences as the group has debts in currencies other than the euro.
Secured senior bonds maturing in 2023
On 23 September 2016, the Group placed guaranteed convertible senior bonds for a nominal value of 285,000 thousand euros, maturing in 2023. The nominal yearly interest rate for said issuance of notes is 3.75%. On 4 April 2017, the Group issued an extension of guaranteed senior bonds maturing in 2023 for a nominal amount of 115,000 thousand euros with an implicit cost until maturity of 3.17%. The outstanding nominal amount at 31 December 2020 is 356,850 thousand euros (“Depreciation and Amortisation 2018” heading).
Depreciation and Amortisation 2018
As a result of the change of control in the 2018 financial year and as established in the voluntary repurchase and early redemption offer of the senior secured bond issue maturing in 2023 (the “Bonds”) due to the change of control, requests were received for the repurchase and redemption of bonds for a nominal amount of 3,150 thousand euros.
The bond repurchase offer was settled on 12 November 2018, the date on which the Group paid an aggregate amount of 3,195 thousand euros to the bondholders, who accepted the offer as a whole:
- Nominal paid in advance: 3,150 thousand euros
- Unpaid accrued interest: 13.5 thousand euros
- Amount of the repurchase premium: 31.5 thousand euros
On 14 December 2018, the Group carried out the partial voluntary early redemption, for a nominal amount of 40,000 thousand euros (representing 10% of its original total amount), of the issue of senior secured bonds maturing in 2023 (the “Bonds”), by means of a linear pro rata reduction of the nominal value of all the bonds in circulation. The Bonds were redeemed early through the payment of approximately 103.760% of the nominal value of the Bonds being redeemed, including:
- Nominal paid in advance: 40,000 thousand euros
- Unpaid accrued interest: 304.2 thousand euros
- Amount of the repurchase premium: 1,200 thousand euros
The Group paid the partial redemptions from available cash.
Secured credit line
On 22 September 2016, the Parent Company and NH Finance, S.A. entered into a revolving business credit with credit institutions amounting to 250,000 thousand euros (“syndicated credit line”) with a maturity of three years, extendable to five years at the time of the refinancing of the guaranteed senior notes maturing in 2019. As a consequence of the refinancing and early payments of the guaranteed senior notes maturing in 2019 which took place in 2017, the maturity date of said financing was extended to 29 September 2021.
On 16 October 2020, the Parent Company and NH Finance, S.A. agreed the extension of the maturity of the finance to 29 March 2023, with a limit of 236,000 euros.
At 31 December 2020, this financing was fully drawn down.
Unsecured loans
Syndicated loan with ICO guarantee maturing in 2023
On 29 April 2020, the Group entered into a syndicated loan for 250,000 thousand euros over 3 years, with no repayments until maturity.
The contract, reached within the legal framework established by the Spanish government to mitigate the economic impact caused by Covid-19, was granted a guarantee by the Spanish state.
At 31 December 2020, this financing was fully drawn down.
Other unsecured loans
In addition to the 250,000 ICO backed syndicated loan, as a result of the crisis caused by Covid-19, throughout 2020 the parent company and its subsidiaries took advantage of government aid in the various countries to take out several loans:
- In May 2020 the parent company signed a bilateral loan for 10,000 thousand euros over 2 years, within the legal framework provided by the Spanish state to mitigate the economic impact of Covid-19 and, in this way, receiving the ICO guarantee.
- In July 2020 the parent company signed a bilateral loan for 7,500 thousand euros over 3 years, within the legal framework provided by the Spanish state to mitigate the economic impact of Covid-19 and, in this way, receiving the ICO guarantee.
- In October 2020 the Italian subsidiary NH Italia Spa signed a bilateral loan for 15,000 thousand euros over 6 years, within the legal framework provided by the Italian state to mitigate the economic impact of Covid-19 and, in this way, receiving the State guarantee (SEPE).
- Furthermore, various bilateral loans totalling 6,400 thousand euros were signed between June and September 2020 in different regions (Portugal, Argentina, Chile, Colombia and the USA) to mitigate the economic impact of the pandemic.
Subordinated loan
A loan amounting to 40,000 thousand euros fully drawn at 31 December 2020 and with a single maturity and repayment in 2037, are included in this item. The interest rate of these loans is the 3-month Euribor plus a spread.
Mortgages
The detail of the mortgage loans and credits is as follows (in thousands of euros):
Credit lines
At 31 December 2020, the balances under this item include the amount drawn down from credit facilities. The joint limit of these loan agreements and credit facilities at 31 December 2020 amounted to 42,000 thousand euros, of which 17,000 thousand euros had been drawn down at that date.
Obligations required in the senior notes contracts maturing in 2023, the syndicated credit line and the syndicated loan with ICO guarantee maturing in 2023
The senior notes maturing in 2023 and the syndicated credit line require the fulfilment of a series of obligations and limitations of essentially homogeneous content as regards the assumption of additional borrowing or provision of guarantees in favour of third parties, the granting of real guarantees on assets, the sale of assets, investments that are permitted, restricted payments (including the distribution of dividends to shareholders), transactions between related parties, corporate transactions and disclosure obligations. These obligations are detailed in the issue prospectus for the aforementioned notes, as well as in the credit agreement of the syndicated credit line.
The syndicated credit line requires compliance with financial ratios; in particular (i) an interest coverage ratio of > 2.00x, (ii) a net indebtedness ratio of < 5.50x, and (iii) a Loan to Value (“LTV”) ratio which, as a result of the redemption of the 2019 senior secured obligations due in 2017, depends on the level of NH’s indebtedness at any given time as indicated below:
– Net debt-to-income ratio ˃ 4.00x: LTV ratio = 70%
– Net debt-to-income ratios ≤ 4.00x: LTV ratio = 85%
– Net debt-to-income ratio ≤ 3.50x: LTV ratio = 100%
The maximum permitted LTV at 31 December 2020 was 70%.
Moreover, the syndicated loan with the ICO guarantee maturing in 2023 requires compliance with financial ratios; in particular, (i) an interest coverage ratio of > 2.00x, (ii) a net indebtedness ratio of < 5.50x
In addition to the waiver obtained in June 2020 for compliance with the financial covenants included in the syndicated credit line for the months of June and December 2020, unanimous approval from the loan institutions was obtained to extend the waiver until June 2021. This waiver until June 2021 also extends to the syndicated loan with the ICO guarantee maturing in 2023.
Package of guaranteed senior notes maturing in 2023 and syndicated credit line
The guaranteed senior notes maturing in 2023 and syndicated credit line (fully drawn down at 31 December 2020) share the following guarantees: (i) pledge of shares: 100% of the share capital of (A) Diegem, , (B) Immo Hotel Brugge NV, (C) Immo Hotel Diegem NV, (D) Immo Hotel Mechelen NV, (E) Immo Hotel Stephanie NV,(F) Onroerend Goed Beheer Maatschappij Van Alphenstraat Zandvoort, B.V. and (G) NH Italia, S.p.A. (ii) first-tier mortgage guarantee on the following hotels located in the Netherlands: NH Conference Centre Koningshof, owned by Koningshof, B.V.; NH Conference Centre Leeuwenhorst, owned by Leeuwenhorst Congres Center, B.V.; NH Zoetermeer, owned by Onroerend Goed Beheer Maatschappij Danny Kayelaan Zoetermeer, B.V.; NH Conference Centre Sparrenhorst, owned by Sparrenhorst, B.V.; NH Capelle, owned by Onroerend Goed Beheer Maatschappij Capelle aan den IJssel, B.V.; and NH Naarden, owned by Onroerend Goed Beheer Maatschappij IJsselmeerweg Naarden, B.V. and the joint guarantee on first demand of the main operating companies in the group wholly owned by the Parent Company.
The net book value of the assets granted as mortgage security against the syndicated credit line of 236,000 thousand euros (drawn down at 31 December 2020) and guaranteed senior notes in the amount of 356,850 thousand euros, maturing in 2023, can be broken down as follows (in thousands of euros):
Limitation on the distribution of Dividends
The guaranteed senior notes maturing in 2023, the syndicated credit line and the syndicated loan with the ICO guarantee maturing in 2023 described above contain clauses limiting the distribution of dividends.
In the case of the senior notes maturing in 2023, the distribution of dividends is generally permitted provided that (a) the interest coverage ratio is > 2.0x and (b) the sum of restricted payments (including dividends and repayment of subordinated debt) made since 8 November 2013 is less than the sum of, amongst other items, (I) 50% of NH’s consolidated net income (even though in the calculation of net income,100% of consolidated net losses must be deducted) from 1 July 2013 to the date of the last quarterly accounts available (this is what is known as the CNI Builder) and, (ii) 100% of the net contributions to NH’s capital from 8 November 2013.
Additionally, as an alternative and without having to be in compliance with the previous condition: (i) in the case of bonds maturing in 2023, NH may distribute dividends provided that the leverage ratio (gross debt/EBITDA) does not exceed 4.5x.
Finally, and also alternatively and without having to be concurrent with the previous ones, the notes maturing in 2023 establish a franchise to be able to make restricted payments (including dividends) without needing to comply with any specific requirement, for a total aggregate amount of 25,000,000 euros as of November 2013.
In the case of the syndicated credit line, and as a result of the extension of its maturity date until March 2023, as agreed in October 2020, distribution of dividends in the 2021 financial year is not permitted.
From 2022 onwards, according to the syndicated credit line and the loan with the ICO guarantee maturing in 2023, the distribution of a percentage of the NH Group’s consolidated net profit from the previous year is allowed, provided that there has been no breach of the financing agreement and the Net Financial Debt (through the Dividend payment) / EBITDA Ratio is less than 4.0x.
The maximum percentage of consolidated net profit to distribute will depend on the Net Financial Debt (through the Dividend payment) /EBITDA Ratio according to the following breakdown:
– Net Financial Debt /EBITDA ≤ 4.0x: Percentage of consolidated net profit: 75%
– Net Financial Debt /EBITDA ≤ 3.5x: Percentage of consolidated net profit: 100%
– Net Financial Debt /EBITDA ≤ 3.0x: Percentage of consolidated net profit: unlimited
All of these metrics are calculated using consolidated data.
At 31 December of the 2020 financial year, the requirements for distribution of dividends charged against that financial year were not met.
Detail of current and non-current payables
The detail, by maturity, of the items included under “Non-Current and Current Payables” is as follows (in thousands of euros):
The detail for maturities of the debt for operating leases without discounting is as follows (in thousands of euros):
Net Debt
The detail of net debt at 31 December is as follows (in thousands of euros):
