KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
F-105
60,000
53,000
The reserve based facility of USD 165 million is secured by pledges on the assets of the subsidiaries Kuwait
Energy Egypt Ltd and Kuwait Energy Ukraine Ltd (see note 14). Out of USD 165 Million facility the Group
has drawn down the first tranche of USD 60 Million on 19 December 2012 and utilised it to repay the
existing loans from IFC. This loan is repayable by 30 June 2017 and is measured at amortised cost using the
effective interest method. As at 31 December 2012, the Group has undrawn loan facilities amounting to USD
105 Million (2011: USD 5 Million), although the amount available for immediate draw down is limited to
USD 78 Million based on the latest borrowing base approved by Deutsche Bank as determined by the
forecast cash flows arising from the borrowing base assets. Subsequent to the year end the Group has drawn
down USD 50 Million of this figure.
The facility from IFC which was secured by pledges on the assets of the subsidiaries Kuwait Energy Egypt
Ltd and Kuwait Energy Yemen Ltd was fully repaid during the year. The loan from EBRD which was secured
by pledges on the assets of Pechora Energy Company Limited was repaid in full during the year.
The group is exposed to interest rate risk because the entities within the Group borrow funds at both floating
and fixed interest rates. This risk is mitigated by the Group maintaining an appropriate mix of floating and
fixed rate borrowings and by use of an interest rate cap (see note 24).
The initial transaction cost of USD 7,647 thousand for securing the Deutsche Bank loan is classified as non-
current assets and will be amortised over the period of the loan.
21.
CONVERTIBLE LOANS
2012
2011
USD 000’s
USD 000’s
Abraaj Capital
50,128
-
Qatar First Investment Bank
33,085
-
83,213
-
During the year, the Group entered into unsecured financing arrangements with Abraaj Capital and Qatar First
Investment Bank for USD 150 million each (total value of USD 300 million). Under the arrangements, the
group has drawn down an amount of USD 83 million, and an additional USD 17 million is available for future
drawdowns. Subsequent to the year end the Group has drawn down this USD 17 Million. Of the USD 200
million remaining on the loans USD 50 million has now expired and the residual USD 150 million is subject
to certain additional conditions precedent. The loans are repayable in three equal instalments payable at every
six month interval starting from 66
th
month from the first draw down date. The loans carry a coupon interest of
8% and together with an additional interest uplift of 8% which is payable at conversion (total effective
interest rate of 16%) will be converted into the equity shares of the Company or will be repaid in cash
depending upon exercise of certain conversion or prepayment options by the lenders and the company. If the
options are not exercised, the outstanding loans, without additional interest, are repaid in cash as per the
repayment schedule.
If the conversion options are exercised, the outstanding loans, together with the additional 8% interest uplift,
are convertible into shares of the Company based on the fair value of the shares on the conversion date. These
embedded options are in the nature of embedded derivatives which have been determined not to be closely
related to the loan arrangements. The group has opted to recognise the convertible loans as financial liabilities
at fair value through the income statement.
The fair value of the total liability as at December 31, 2012 is determined at USD 83,213 thousand and the
resulting loss of USD 213 thousand due to the change in fair value since inception, due to changes in
forecasted cash flows, is recognised in the income statement. The convertible loans are both classified as
Level 3. Level 3 fair value measurements are those derived from inputs that are not based on observable
market data (unobservable inputs).
