4.3.24Borrowings and Lease Liabilities

The line item ’Borrowings and lease liabilities’ in the consolidated statement of financial position is further detailed as follows: 

Borrowings and lease liabilities (summary)

Borrowings

The movement in borrowings is as follows:

The Company has no ’off-balance sheet’ financing through special purpose entities. All long-term debt is included in the consolidated statement of financial position.

Further disclosures about the fair value measurement are included in note 4.3.29 Financial Instruments − Fair Values and Risk Management .

The borrowings, excluding transaction costs and amortized costs amounting to US$ 94 million (2017: US$ 112 million), have the following forecast repayment schedule:

The borrowings by entity are as follows:

Loans and borrowings per entity

• ¹ % interest per annum on the remaining loan balance.

The ’Other debt’ mainly includes loans received from partners in subsidiaries.

For the project finance facilities, the respective vessels are mortgaged to the banks or to note holders.

The Company has available borrowing facilities being the (i) undrawn revolving credit facility (RCF), (ii) the undrawn FPSO Liza Destiny project facility and (iii) short-term credit lines. As per December 31, 2018, the undrawn FPSO Liza Destiny project facility of US$ 720 million required the fulfillment of specific lenders conditions precedent.

The expiry date of the undrawn facilities and unused credit lines are:

Expiry date of the undrawn facilities and unused credit lines

The revolving credit facility (RCF) in place as of December 31, 2018 has a maturity date of December 16, 2021. The US$ 1 billion facility was secured with a selected group of 13 core relationship banks and replaces the previous facility of US$ 750 million. In the last year of its term (from December 17, 2020 to December 16, 2021) the RCF will be reduced by US$ 50 million. The RCF can be increased by US$ 250 million on three occasions up to a total amount of US$ 1,250 million (US$ 1,200 million in the last year), subject to the approval of the RCF lenders. The RCF commercial conditions are based on LIBOR and a margin adjusted in accordance with the applicable leverage ratio ranging from a bottom level of 0.50% p.a. to a maximum of 1.90% p.a.

Covenants

The following key financial covenants apply to the RCF as agreed with the respective lenders, and, unless stated otherwise, relate to the Company’s consolidated financial statements:

• Solvency ratio: tangible net worth divided by total tangible assets > 25%

• Leverage Ratio: consolidated net borrowings divided by adjusted EBITDA < 3.75

• Interest Cover Ratio: adjusted EBITDA divided by net interest payable > 4.0

For the purpose of covenants calculations, the following simplified definitions apply:

• Tangible Net Worth: Total equity (including non-controlling interests) of the Company in accordance with IFRS, excluding the mark to market valuation of currency and interest derivatives undertaken for hedging purposes by the Company through other comprehensive income

• Total Tangible Assets: The Company total assets (excluding intangible assets) in accordance with IFRS consolidated statement of financial position less the mark to market valuation of currency and interest derivatives undertaken for hedging purposes by the Company through other comprehensive income

• Adjusted EBITDA: Consolidated earnings before interest, tax and depreciation of assets and impairments of the Company in accordance with IFRS except for all Lease and Operate co-owned investees being then proportionally consolidated, adjusted for any exceptional or extraordinary items, and by adding back the capital portion of any finance lease received by the Company during the period

• Consolidated Net Borrowings: Outstanding principal amount of any moneys borrowed or element of indebtedness aggregated on a proportional basis for the Company’s share of interest less the consolidated cash and cash equivalents available

• Net Interest Payable: All interest and other financing charges paid up, payable (other than capitalized interest during a construction period and interest paid or payable between wholly owned members of the Company) by the Company less all interest and other financing charges received or receivable by the Company, as per IFRS and on a proportional basis for the Company’s share of interests in all Lease and Operate co-owned investees.

Covenants

• ¹ Exceptional items restated from 2018 Adjusted EBITDA are mainly related to the settlement with the MPF, the impact of IFRS 16 early adoption and the estimated insurance income related to the Yme insurance claim (net of claim related expenses incurred up to December 31, 2018) and restructuring costs.
• ² Exceptional items restated from 2017 Adjusted EBITDA are mainly related to the settlement with the DoJ, the unwinding of the commitments to the partners in the investee owning the Turritella (FPSO), the estimated insurance income related to the Yme insurance claim (net of claim related expenses incurred up to December 31, 2017) and restructuring costs.

None of the borrowings in the statement of financial position were in default as at the reporting date or at any time during the year. During 2018 and 2017 there were no breaches of the loan arrangement terms and hence no default needed to be remedied, or the terms of the loan arrangement renegotiated, before the financial statements were authorized for issue.

The Company entered into a new RCF agreement with the respective lenders on February 13, 2019, refer to note 4.3.35 Events After End of Reporting Period for further details.

Lease Liabilities

The movement in the lease liabilities is as follows:

Maturity of the lease liabilities is analyzed as follows:

The total cash outflow for leases in 2018 was US$ 35 million, which includes redemptions of principal and interest payments.