+++++++++++++++++++++++++ Goodman Fielder today advises that payment obligations of approximately A$392 million may be incurred as a result of the company closing-out existing US debt arrangements early if the current takeover bid by Burns Philp is successful.
In 1999, a subsidiary of Goodman Fielder issued US$200 million principal amount of guaranteed senior notes due in 2011 to institutional investors resident in the United States. The obligations under the Notes and associated documentation are unconditionally guaranteed by Goodman Fielder.
The relevant Note Purchase Agreement contains provisions for early repayment of the principal amount and a 'make whole' amount in certain circumstances, at the option of the noteholders.
Goodman Fielder has reviewed the Note documentation and has now obtained advice from US counsel, following the announcement by Burns Philp of an unsolicited takeover bid for Goodman Fielder.
The provisions for early repayment of the principal amount and payment of a 'make whole' amount are not automatically triggered by a change of control of Goodman Fielder. However, an early repayment obligation and an obligation to pay the 'make whole' amount is likely to be triggered if the Burns Philp bid is successful.
This is because Burns Philp has advised in its Bidder's Statement that the financiers of the Burns Philp bid will take security over assets of Goodman Fielder and its subsidiaries if the Burns Philp bid is successful (and Goodman Fielder presumes) Goodman Fielder and its subsidiaries will assume obligations, for the payment of the Burns Philp bid facilities as part of the security arrangements.
The principal amount outstanding is US$200 million. The amount of the 'make whole' payment is US$40million (or US$28 million after tax). If the Notes are repaid early, Goodman fielder will receive a payment from the close-out of interest rate swaps, presently about US$19 million (or US$13 million after tax), giving a net after tax cost of US$15 million, approximately A$26 million.
The total amount presently likely to be payable, as a consequence of the early repayment of the Notes should the Burns Philp bid succeed, is therefore about US$221 million before tax. The Australian dollar equivalent is approximately A$392 million. These amounts fluctuate on a daily basis.
The current obligations may be summarised as follows.
USD AUD AFTER TAX AFTER TAX (USD) (AUD)
Principal 200m 355m 200m 355m Make Whole Payment 40m 71m 28m 50m Swaps close out (19m) (34m) (13m) (24)m
Total payable 221m 392m 215m 381m
Goodman Fielder had not been informed, at the date of this announcement, of the intentions of any of the Noteholders in the event that the Burns Philp bid is successful.
