Debt Facilities
A new $180 million syndicated debt facility has been negotiated
for Australian Education Trust (AET or the Trust). The new
banking facility replaces the previous facility with the National
Australia Bank (NAB) and the US sourced Senior Secured Notes (US
Noteholders) which were due to mature on 31 July 2011. This will
result in the US Noteholders being repaid over 7 months in advance
and a significant reduction in the cost of debt over that
period. It also allows for distributions to recommence,
effective 1 January 2011.
The key commercial terms of the syndicated
facility are as follows:
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Facility Limit
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$180 million
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Drawn Amount
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$140 million as at 30 June 2011
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Facility Term
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3 Years
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Financiers
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NAB & ANZ (50% equal share)
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Security Trustee / Facility Agent
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NAB
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Security
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First ranking mortgages over each
freehold property
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Margins
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Scale of margins dependant upon the Trust’s
LVR position
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Maximum Loan to Value Ratio
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55% of Freehold & 50% of Leasehold
Interests
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Financial Charges Ratio
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Not to be less than 1.4x for FY11 and 1.6x for
FY12 and beyond measured on a six monthly basis
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Alternate Use Ratio
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Debt is not to exceed 100% of Alternate Use
Values for portfolio
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Interest Rate Hedging
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AET has entered into new hedging arrangements
to protect the Trust
against adverse interest rate movements over the term of its three
year banking facility, which expires in December 2013. The Trust
has entered into two separate hedging arrangements totaling $120
million commencing on 23 May 2011 which are detailed below. These
rates are exclusive of lender margins.
- A $60 million interest rate swap at a
fixed rate of 5.63% pa. This will result in AET paying a fixed
interest rate, irrespective of the underlying floating interest
rate environment over the term of the facility.
- A $60 million cap/collar arrangement
that has a cap of 6% pa (maximum amount payable) and a floor of
4.9% pa (minimum amount payable) of which a premium is payable of
approximately $150,000 pa.
Based on the current drawn debt of $140.0
million, AET has hedged 86% of its interest rate exposure against
interest rate movements.
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As at the 30 June 2011, the Fund complied with
all of its debt covenant ratios and obligations.
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