After the Group had suffered the full impact of the financial and economic crisis in the recent past, which strongly affected the print media industry, we have been successful in surpassing the operating break-even point during the financial year. When the capital market became unavailable for financing, the German Federal Government, and German State Governments as well as the affected banks actively supported us with bridge funding. During the financial year, the Group was successful in arranging comprehensive refinancing in several steps, which we represent below.
Prior to the crisis in the printing industry, Heidelberg had access to credit of more than € 1.5 billion. As is generally the case, the commitment to the lines of credit was in some respects tied to compliance with certain parameters. As the crisis unfolded, these could no longer be complied with. In the case of the convertible bond, due to the marked decline in our share’s price, we had to assume that investors would exercise their right of redemption at the reference date. As a consequence, it was necessary to restructure nearly our entire credit facilities in the shortest possible time. How did we succeed in receiving bridge funding despite the extremely difficult underlying conditions in 2009? Because we were able to convince the affected banks and guarantors that our business model is workable – that within a particular time frame and with certain measures we would generate a turnaround. This entailed detailed presentations of various scenarios, which included the respective overall impact on net assets, the financial position, and the Company’s results of operations. The bridge funding comprised a line of credit totaling € 1.4 billion, which was made available through the summer of 2012. It was made up of three components: a loan under the special program of the Reconstruction Loan Corporation (KfW) of initially € 300 million; a line of credit of € 550 million that was 90 percent secured by guarantees from the German Federal Government and the States of Baden-Wuerttemberg and Brandenburg, as well as a syndicated line of credit from a bank underwriting syndicate of € 550 million, which was prolonged at revised terms.
We achieved our goal of financing Heidelberg via the capital market again as quickly as possible, of returning the Federal Government and State guarantees early and entirely, and of reducing the net financial debt. We carried through a capital increase in the autumn of 2010, thereby reducing existing credit arrangements by approximately € 400 million. We utilized the net underwriting revenue entirely for the repayment of financial liabilities, among others reducing the KfW credit. We repaid the remaining approximately € 100 million out of free cash flow and through restructuring our financial arrangements in December 2010.
Due to the improved capital structure, we reduced the Group’s overall credit facility from the previous level of € 1.4 billion to approximately € 900 million. This considerably improved our start-up position for arranging additional refinancing.
In our refinancing measures, we focused closely on attaining a well-balanced structure of maturities while at the same time diversifying our sources of financing. Our goal was to discontinue our exclusive dependence on banks and the accompanying need to renegotiate the entire line of credit at a particular point in time. We were successful in this endeavor thanks to the seven-year, high-yield bond, which we successfully issued at the beginning of April 2011. At the same time, a new € 500 million revolving line of credit with a banking syndicate came into force on April 7, 2011,which will run until the end of 2014. We discuss the structure and the maturities in more detail in the chapter “Financial Position”.