Material contracts
Below are the material contracts (being contracts entered into by the NWR Group in the last two years and which are, or may be, material to the NWR Group as at the date of this Annual Report) into which the NWR Group has entered containing information which the shareholders could reasonably require.
Underwriting agreement
In connection with the IPO in May 2008, NWR, RPG Industries SE (“RPGI”), the Directors and the managers: Morgan Stanley & Co. International plc., Goldman Sachs International, JPMorgan Cazenove Limited, JP Morgan Securities Ltd, Citigroup Global Markets Limited, Bank Austria Creditanstalt AG, Barclays Bank PLC, Česká spořitelna, a.s., Erste Bank, Patria Finance, a.s., UniCredit Markets & Investment Banking and Wood & Company Financial Services, a.s. (collectively the “Managers”) entered into the Underwriting Agreement.
NWR and RPGI agreed to pay certain commissions, costs, charges, fees and expenses arising in connection with the IPO. Under the Underwriting Agreement, NWR, RPGI and the Directors gave certain warranties, undertakings and indemnities to the Managers subject to customary limitations. NWR, RPGI and the Directors are prohibited from disposing of their A shares in NWR for a certain period of time, as provided for in the Underwriting Agreement.
Senior facilities agreement
OKD is a borrower under the Senior Facilities Agreement entered into as of 14 February 2006, as amended, between, among others, OKD, the guarantors named therein, the lenders named therein, Citibank N.A. and Citibank Europe plc, organizacni slozka as arrangers and underwriters. NWR is a borrower with respect to certain facilities, and a guarantor with respect to the remainder of the facilities.
The Senior Facilities Agreement provides financing of up to EUR 1,070 million and consists of:
- a senior secured amortising term loan facility in a maximum aggregate principal of EUR 450 million with advances to be repaid in equal semi-annual instalments and a final maturity five years after the date of the Senior Facilities Agreement (Facility 1);
- a senior secured bullet term loan facility in a maximum aggregate principal amount of equivalent EUR 350 million, including the Additional Loan Option (as defined below), with a final maturity six years after the date of the Senior Facilities Agreement (Facility 2);
- a senior secured bullet term loan facility in a maximum aggregate principal amount of EUR 270 million, including the Additional Loan Option, with a final maturity seven years after the date of the Senior Facilities Agreement (Facility 3); and
- a EUR 350 million ‘‘Additional Loan Amount’’ which was made available as part of Facility 2 and Facility 3 in the amounts of EUR 188.5 million from available amount of Facility 2 and EUR 161.5 million from the available amount of Facility 3, and a EUR 25 million ‘‘Additional Loan Amount’’ which was made available by Cˇeská sporˇitelna from the available amount of Facility 3 (the ‘‘Additional Loan Option’’).
The Senior Facilities Agreement contains certain customary negative undertakings that limit the ability of NWR and certain of its material subsidiaries to take certain actions, including, among other things, the ability to: create any encumbrance or security interest over any of its assets; dispose of certain assets; make any substantial change to the general nature of its business; enter into material transactions other than on an arm’s length basis; merge or liquidate; incur additional debt or make any guarantees or loans of debt; issue new shares; make acquisitions of or invest in certain companies, shares or securities, businesses, assets or undertakings; and amend certain agreements.
The Senior Facilities Agreement also contains certain affirmative undertakings, subject to certain qualifications and including, but not limited to, undertakings related to (i) supplying financial statements, related documents and other information; (ii) notification of default; (iii) compliance with ‘‘know your customer’’ or similar regulations; (iv) receipt, compliance with and maintenance of necessary authorisations; (v) compliance with laws (including environmental laws); (vi) taxation; (vii) pari passu ranking of certain unsecured and unsubordinated claims; (viii) maintenance of insurance; (ix) access in the case of a default; (x) preservation of intellectual property rights necessary for the business of OKD and its subsidiaries; (xi) compliance with financial assistance requirements; (xii) ensuring that certain bank accounts required to be maintained pursuant to the cash management system are subject to security in favour of the security agent under the Senior Facilities Agreement; (xiii) provision of guarantees and security by certain subsidiaries; and (xiv) implementation of the agreed hedging strategy.
The Senior Facilities Agreement contains financial covenants (in each case as defined therein) requiring the Obligors (as defined therein) to ensure that at the end of any calculation period: the ratio of consolidated total senior net debt to consolidated EBITDA (senior leverage) will not exceed 2.75:1 for the period ending 5 years after the signing date and 2.50:1 thereafter; the ratio of consolidated total net debt to consolidated EBITDA (leverage) will not exceed 3.25:1; and the ratio of consolidated EBITDA to consolidated total net interest payable (fixed cover) will not be less than 3.50:1.
Indenture
On 18 May 2007, NWR issued EUR 300 million in aggregate principal amount of its Senior Notes. Interest on the Senior Notes accrues at a rate of 7.375 per cent per annum and is payable semi-annually in arrears on 15 May and 15 November of each year until maturity. The Senior Notes are unsecured obligations of NWR.
The Senior Notes may be redeemed, in whole or in part, at any time prior to 15 May 2011, at the option of NWR at a redemption price equal to 100 per cent of the principal amount of the Senior Notes redeemed plus the applicable premium (as defined in the Indenture). After 15 May 2011, NWR may, at its option, redeem all or any portion of the Senior Notes. In addition, prior to 15 May 2010 NWR may redeem up to 35 per cent of the original aggregate principal amount of the Senior Notes with the proceeds of one or more equity offers (as defined in the Indenture), at a redemption price equal to 107.375 per cent of the principal amount thereof plus accrued interest and unpaid interest to the repurchase date.
If there is a change of control (as defined in the Indenture), holders of Senior Notes shall have the right to require NWR to repurchase all or any part of the Senior Notes at a purchase price equal to 101 per cent of the their principal amount.
The Indenture contains covenants that limit the ability of NWR and its restricted subsidiaries (which, generally, are subsidiaries of NWR other than those primarily engaged in the business of real estate) to, among other things: incur additional indebtedness; make restricted payments (including dividends); create liens; transfer, convey, sell, lease or otherwise dispose of voting stock of any restricted subsidiary; sell assets; engage in transactions with affiliates; guarantee any debt of NWR or any of its restricted subsidiaries; or consolidate, merge or sell all or substantially all of its assets.
Intercreditor agreement
NWR and OKD are each party to an intercreditor agreement entered into on or around 30 November 2006, between, amongst others, OKD, NWR, the other obligors (being certain of the material subsidiaries of NWR), the lenders and the agents under the Senior Facilities Agreement, certain hedging counterparties and the security agent for such facilities. The intercreditor agreement establishes, among other things, when payments can be made in respect of debt of NWR, OKD and certain other affiliates.
The Intercreditor Agreement sets out (i) the relative ranking of certain debt of NWR, OKD and certain of their affiliates; (ii) the relevant ranking of security granted by NWR, OKD and certain of their affiliates; (iii) when payments can be made in respect of that debt; (iv) when enforcement action can be taken in respect of that debt; (v) the terms pursuant to which certain of that debt will be subordinated upon the occurrence of certain insolvency events; (vi) turnover provisions; and (vii) when security and guarantees will be released to permit an enforcement sale.
Agreements on transport
OKD entered into the Transport Agreements with OKD, Doprava, relating to the transport of coal and other materials from NWR to its largest customers. The Transport Agreements are “umbrella” agreements covering periods of one to five years. Under the Transport Agreements, Doprava shall provide OKD with non-exclusive transport services. The transport fees to be paid by OKD to Doprava shall be set out in accordance with each respective Transport Agreement or in a price agreement for each calendar year amending the Transport Agreements based on weight of transported goods. The Transport Agreements may be terminated, with or without cause, by either party giving prior written notice to the other party, whereby the notice period varies from one to six months.
Master advisory and service agreement
On 28 March 2007, NWR entered into the Master Advisory and Services Agreement, as amended on 27 July 2007 with Bakala Crossroads Partners a.s. (“BCRP”) (previously RPG Advisors, a.s.), a Czech-based direct subsidiary of RPG Partners Limited, in respect of the provision of certain non-exclusive advisory services by BCRP to NWR effective as of 1 September 2006, including services in connection with the acquisition and divestiture of assets, the entry into joint venture arrangements, corporate finance matters and market research initiatives within Central Europe, including the Czech Republic. The advisory fees to be paid by NWR to BCRP, as well as the types of services to be provided by BCRP or its subcontractors, shall be set out in supplemental agreements entered into by NWR and BCRP for each project or transaction. NWR has to reimburse BCRP for all expenses incurred by BCRP in connection with the provision of advisory services. NWR indemnifies BCRP (and its members, employees or shareholders) for any loss suffered in connection with the provision of services under the Master Advisory and Services Agreement. The Master Advisory and Services Agreement may be terminated, with or without cause, by either party giving prior written notice to the other party; provided, that if the Master Advisory and Services Agreement is terminated for any reason other than a material breach, the notice period is one month. The Master Advisory and Services Agreement includes a one-year post-termination confidentiality clause.
Sale of Bastro
On 2 December 2008, NWR announced that the sale of OKD, BASTRO, a.s. (“Bastro”), the mining equipment and engineering services company and direct subsidiary to OKD, was concluded by OKD. Bastro was sold to Bucyrus DBT Europe GmbH, the German subsidiary of Bucyrus International, Inc., a mining equipment manufacturer.
The sale of Bastro was consistent with OKD’s ongoing efforts to focus on its core business of coal mining. Bastro will continue to supply mining equipment and engineering services to OKD.
Equipment supply contract
NWR is party to an equipment supply contract entered into on 16 June 2008, as amended on 27 June 2008 and 11 September 2008. Pursuant to the contract, NWR agreed to purchase certain face equipment for longwall coal extraction, for approximately EUR 160 million. The equipment is expected to be delivered, assembled and operational by the end of 2009. NWR expects to finance the acquisition of the equipment out of existing cash or funds which will be borrowed under a loan arrangement.
Executive Directors service agreements and Non-Executive Directors letters of appointment
See the remuneration report for more information.
Stock option plan
See the remuneration report for more information.