Hydro intends to keep funds from operations of at least 40 percent of net adjusted interest-bearing debt in addition to net adjusted interest-bearing debt at a ratio of 0.55 to equity capital over time.
Definitions
Funds from operations (FFO):
- Net income attributable to parent
- Plus deferred taxes
- Plus depreciation and amortization
- Plus Hydro's share of depreciation and amortization in equity accounted investments
- Less unrealized gains/(losses) on LME, power and currency derivatives
- Less metal effect in Rolled Products
Net adjusted interest-bearing debt:
- Short-term and long-term interest-bearing debt
- Less cash and cash equivalents and short-term investments
- Plus cash and short-term investments in captive insurance company
- Plus net pension liability at fair value, after expected tax benefit
- Plus operating lease commitments, after expected tax benefit
- Plus net interest-bearing debt in equity accounted investments
- Plus other financial obligations, after expected tax benefit
Terms
Substantially all of Hydro’s indebtedness is situated in the parent company, Norsk Hydro ASA. In general, the terms of each of the debt agreements and indentures governing the indebtedness have contained the following:
- Cross-default provisions
- Provisions restricting the pledging of assets to secure future borrowings without granting equivalent status to existing lenders
- No financial ratio covenants
- No provisions connected to Hydro’s credit rating or value of underlying assets
- No lender-right to demand repayment prior to scheduled maturity
Currently Hydro has no outstanding bonds.
