Note 15 – Net Debt

The net debt comprises:

million CHF

 

Notes

 

2018

 

2017

 

 

 

 

 

 

 

Debt

 

 

 

 

 

 

Non-current debt

 

 

 

3,621

 

3,730

Current debt

 

 

 

441

 

516

Total debt

 

 

 

4,062

 

4,246

 

 

 

 

 

 

 

Loans and advances (floating interest rates)

 

 

 

 

 

 

Non-current loans and advances

 

 

 

(46)

 

(5)

Cash and cash equivalents

 

 

 

(461)

 

(479)

Cash and cash equivalents classified as held for sale

 

5.2

 

(21)

 

0

Total loans and advances and cash and cash equivalents

 

 

 

(528)

 

(484)

 

 

 

 

 

 

 

Net debt

 

 

 

3,534

 

3,762

Non-Current Debt

million CHF

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Straight bonds

 

 

 

914

 

 

 

1,213

Syndicated loan (2017–2023)

 

 

 

254

 

 

 

223

Term loans

 

 

 

982

 

 

 

993

German private placement

 

 

 

1,082

 

 

 

1,108

Other long-term debt

 

 

 

 

 

 

 

 

– Banks and other financial institutions

 

197

 

 

 

0

 

 

– Others

 

182

 

379

 

182

 

182

Finance lease liabilities

 

 

 

10

 

 

 

11

Total non-current debt

 

 

 

3,621

 

 

 

3,730

Straight Bonds – Fixed Interest Rates

million CHF

 

2018

 

2017

 

 

 

 

 

3.125% CHF 140 million, 2011/2018, due 7 December 2018, issued at 100.56%

 

0

 

140

2% CHF 200 million, 2012/2018, due 11 October 2018, issued at 100.21%

 

0

 

200

3% CHF 105 million, 2012/2022, due 11 October 2022, issued at 100.74%

 

105

 

105

1.75% CHF 300 million, 2013/2019, due 10 April 2019, issued at 100.45%

 

300

 

299

0.625% CHF 150 million, 2015/2020, due 22 September 2020, issued at 100.135%

 

150

 

150

1.25% CHF 175 million, 2015/2023, due 22 September 2023, issued at 100.133%

 

175

 

175

0.125% CHF 250 million, 2016/2021, due 1 November 2021, issued at 100.037%

 

249

 

249

0.2% CHF 125 million, 2017/2021, due 12 July 2021, issued at 100.179%

 

125

 

125

0.7% CHF 110 million, 2017/2024, due 12 July 2024, issued at 100.222%

 

110

 

110

Total including current portion

 

1,214

 

1,553

 

 

 

 

 

Less current portion of straight bonds

 

(300)

 

(340)

Total non-current straight bonds

 

914

 

1,213

Term Loans

In 2017, Lonza issued term loans of EUR 450 million and USD 489 million tranches carrying floating interest rates and repayable in 2020 and 2022 (EUR 225 million and USD 245 million at the first maturity date), respectively. The net proceeds of the two term loan tranches received in 2017 totaled CHF 955 million.

German Private Placement

  • Dual-currency German private placement (Schuldscheindarlehen) of EUR 700 million and USD 200 million tranches carry fixed and floating interest rates (LIBOR/EURIBOR + margin) respectively, and are repayable in 2021 (EUR 325 million), 2022 (USD 150 million), 2023 (EUR 375 million) and 2024 (USD 50 million). The net proceeds of the German private placement tranches in 2017 totaled CHF 986 million.
  • Single-tranche German private placement (Schuldscheindarlehen) of USD 100 million carrying floating interest rates (LIBOR + margin) and repayable in 2024. The net proceeds in 2017 amounted to CHF 99 million.

Syndicated Loan

In 2017 Lonza signed a syndicated loan with a consortium of banks on the following terms: Credit facility of CHF 700 million, of which CHF 259 million was used as of 31 December 2018 (2017: CHF 230 million), due 2023, at floating interest rates (based on LIBOR). The syndicated loan agreement contains a financial covenant that is based on Lonza’s net debt/EBITDA ratio. The Group was released in 2018 from this covenant as the net debt/EBITDA ratio fell below a defined threshold.

Others

Other non-current debt comprises industrial revenue bonds of USD 187 million issued by governmental institutions in the United States (repayable in 2020, 2022, 2025, 2030 and 2047) and a bank loan of USD 200 million, repayable in 2024. The private placement of senior notes amounting to USD 158 million with certain institutional investors was repaid in 2017.

Acquisition Bridge Financing

The 2017 acquisition of Capsugel was financed with a combination of debt and equity financing. Lonza had committed debt financing (bridge financing) for the full acquisition amount of USD 5.5 billion from Bank of America Merrill Lynch and UBS, of which USD 1,457 million was raised in July 2017. The net proceeds of the bridge financing received in 2017 amounted to CHF 1,380 million after considering up-front fees of CHF 19 million (an additional CHF 18 million was paid in 2016). The bridge financing was fully repaid in 2017 and consequently the related up-front fees of CHF 37 million were recorded in the income statement.

Current Debt

million CHF

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Due to banks and other financial institutions

 

 

 

103

 

 

 

119

Others

 

 

 

37

 

 

 

56

Leases

 

 

 

1

 

 

 

1

Non-current debt due within one year

 

 

 

 

 

 

 

 

– Straight bond (2013–2019)

 

300

 

 

 

0

 

 

– Straight bond (2011–2018)

 

0

 

 

 

140

 

 

– Straight bond (2012–2018)

 

0

 

300

 

200

 

340

Total current debt

 

 

 

441

 

 

 

516

Debt: Movements in Carrying Value of Recognized Liabilities

million CHF

 

2018

 

2017

 

 

 

 

 

At 1 January

 

4,246

 

1,860

 

 

 

 

 

Repayment of straight bond

 

(340)

 

0

Proceeds from German private placements

 

0

 

1,085

Issue of term loans

 

0

 

955

Issue of straight bond

 

0

 

235

Issue of syndicated loan

 

29

 

225

Repayment of syndicated loan

 

0

 

(100)

Proceeds from acquisition bridge financing

 

0

 

1,380

Repayment of acquisition bridge financing

 

0

 

(1,399)

Repayment of US private placement

 

0

 

(156)

Repayment of acquired Capsugel debt

 

0

 

(1,952)

Proceeds from borrowings

 

152

 

73

Changes from financing cash flows

 

(159)

 

346

 

 

 

 

 

Amortization of financing costs and discounts

 

6

 

43

 

 

 

 

 

Business combinations

 

3

 

1,978

 

 

 

 

 

Reclassification of fees related to Capsugel financing (prepaid in 2016) to debt

 

0

 

(26)

 

 

 

 

 

Net foreign currency transaction (gains) / losses

 

(41)

 

69

Currency translation effects

 

7

 

(24)

Changes in foreign exchanges rates

 

(34)

 

45

 

 

 

 

 

At 31 December

 

4,062

 

4,246

Breakdown of Total Debt by Currencies

million CHF

 

 

 

 

 

2018

 

 

 

 

 

2017

 

 

Average interest rate %

 

%

 

 

 

Average interest rate %

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHF

 

1.32

 

38

 

1,531

 

1.42

 

45

 

1,927

EUR

 

1.04

 

32

 

1,295

 

1.15

 

32

 

1,343

USD

 

3.03

 

30

 

1,236

 

2.57

 

23

 

976

Total

 

 

 

100

 

4,062

 

 

 

100

 

4,246