In August 2003 the US$2,000 million bank facility assumed with Miller was refinanced with the successful issue of US$1,100 million 5.5% ten-year bonds and US$600 million 4.25% five-year bonds by Miller Brewing Company, with effective interest rates of 5.21% and 3.94% respectively, the balance being repaid by Miller from its surplus cash resources. Concurrently SABMiller plc also issued US$300 million 6.625% 30-year bonds with an effective interest rate of 6.41%. The effective interest rates are arrived at after taking into account hedges which were put in place prior to the issuance of the bonds to protect against rising underlying Treasury interest rates. The average loan maturity in respect of the US$ fixed-rate debt portfolio is some 5.25 years, and the analysis of debt at 31 March 2004 included in the notes to the accounts, includes the impact of this refinancing. As at 31 March 2004 68% of the group’s debt was held as fixed-rate debt.
Gross borrowings have increased to US$3,707 million from US$3,523 million at 31 March 2003. Gross borrowings relative to net cash inflow from operating activities before working capital movement (EBITDA) reduced to 1.7 from a level in excess of 2.0 at the prior year end. The average borrowing rate for the total debt portfolio as at 31 March 2004 was 4.8% (2003: 4.3%), reflecting a higher interest rate associated with the bonds described above. The group’s gearing, as measured by net debt relative to net assets, decreased at the year end to 43.3% from last year’s 46.6% (restated for UITF 38), and the group has substantial unutilised borrowing facilities.
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