120 / 364
4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Financing and financial security, net debt and cost of net debt
DANONE
REGISTRATION DOCUMENT 2015
120
In those countries where centralized financing is not available, when
medium-term financing is unavailable and/or in the case of some
existing financing in a company prior to the acquisition by Danone
of a controlling interest in it, Danone is exposed to liquidity risk
involving limited amounts in those countries.
More generally, it is possible that in the context of a systemic
financial crisis, Danone may not be able to access the financing or
refinancing it needs on the credit or capital markets, or to access
such finance on satisfactory terms, which could have an adverse
impact on its financial situation.
In addition, Danone's ability to access financing and its interest
expense could depend in part on its credit rating by financial rating
agencies. The Company's short- and long-term debt ratings and
any potential deterioration could result in higher financing costs
and affect its access to financing.
Lastly, most of the financing agreements entered into by the Com-
pany (bank lines of credit and bonds) include a change of control
provision, which offers creditors a right of early repayment in the
event a change in control of the Company causes its rating by the
financial rating agencies to fall below investment grade.
Risk monitoring and management
Under its refinancing policy, Danone reduces its exposure to finan-
cing risk by (i) centralizing its financing sources, (ii) borrowing from
diversified financing sources, (iii) arranging a significant portion of
its financing as medium-term financing, (iv) maintaining financing
sources available at all times, and (v) ensuring that it is not subject
to any covenant relative to maintaining financial ratios in connection
with financing contracts.
In those countries where centralized financing is not available, when
medium-term financing is unavailable and/or in the case of some
existing financing in a company prior to the acquisition by Danone
of a controlling interest in it, certain Group companies may, for
operational reasons, be required to borrow from local sources.
From a Group perspective, the amounts borrowed are relatively
small, whether considered individually or in total, given the level
of operating cash flow that is generally sufficient to finance their
operations and organic growth.
Use of its financing sources
The Group's policy consists of keeping its financing sources available
and managing them at the Company level. The Group may need to
use (i) its commercial paper program and syndicated credit facility
to manage its cash cycle, notably when paying out the dividend to
Danone shareholders, and (ii) alternatively, its commercial paper
and EMTN programs or its syndicated credit facility to optimize its
financing cost while still ensuring its financial security, such that
the maturity and currency of its financing raised may vary without
changing the net debt level or the Group's financial security.
Note 10.3. Group's financing and financial security situation managed at the Company level
and changes during the period
Structure of the Group's main financing and its financial security
As of December 31
2014
2015
(in € millions, except bond issued
in the United States in USD millions)
Principal amount
Amount used
(f)
Principal amount
Amount used
(f)
Bank financing
(a)
Syndicated credit facility
(b)
2,000
–
2,000
–
Committed credit facilities
(c)
3,400
–
3,400
–
Capital markets financing
(a)
EMTN financing
(d) (e)
9,000
6,691
9,000
8,262
Bond issued in the United States
(d)
N/A
850
N/A
850
Commercial paper (
Billets de trésorerie
)
3,000
1,068
3,000
974
(a) The Group's financial structure and financial security are managed at the Company level.
(b) Syndicated credit facility (revolving) maturing in December 2019.
(c) A portfolio of back-up facilities entered into with major credit institutions, with maturities ranging from 2015 to 2018.
(d) Bonds issued by the Company are disclosed on the Group's website.
(e) Euro Medium Term Notes.
(f) Amounts are expressed in € except amounts related to the bond issued in the United Sates, which are expressed in USD.