Financing

Fresenius meets its financing needs through a combination of operating cash flows generated in the business segments and short-, mid-, and long-term debt. In addition to bank loans, important financing instruments include the issuance of Senior Notes, Euro Notes, a commercial paper program, and a receivables securitization program.

In 2010, the Group’s financing activities mainly involved the refinancing of existing and maturing financing instruments. Better terms were secured in some cases.

  • In January 2010, Fresenius Medical Care issued unsecured Senior Notes due in 2016 in the principal amount of €250 million. The coupon is 5.5%. With an issue price of 98.6636%, the yield to maturity is 5.75%. The proceeds were used to repay short-term debt and for general corporate purposes.
  • In March 2010, the former Fresenius SE considerably improved the terms of its 2008 syndicated credit agreement following negotiations with the lenders. Within the scope of the amended agreement, the interest rate of the approximately US$1.2 billion term loan B (new term loan C) was reduced. The new interest rate consists of the relevant money market rate (LIBOR and EURIBOR), subject to a 1.50% floor (formerly 3.25%), plus a 3.00% margin (formerly 3.50%). It was possible to renegotiate the terms because both Fresenius’ debt ratios and the prevailing terms on the debt market had improved considerably since the syndicated credit was concluded.
  • In September 2010, Fresenius Medical Care renewed and increased its 2006 syndicated credit agreement. The life of the revolving credit line and term loan A was extended by two years to March 31, 2013. These facilities will therefore fall due for repayment at the same time as term loan B, which is currently US$1.5 billion. Owing to the broad agreement of the lenders and the strong interest in the banking market, it was also possible to increase the revolving credit line and term loan A overall by US$250 million to a total of approximately US$2.565 billion. The increased credit facility is for financing general corporate purposes and working capital needs. This transaction helped to lengthen the maturity profile of the debt.
  • In February 2011, Fresenius Medical Care AG issued unsecured Senior Notes due in 2021 in the principal amount of US$650 million through its subsidiary Fresenius Medical Care US Finance, Inc. and through its subsidiary FMC Finance VII S.A. in the principal amount of €300 million. The coupon of the U.S. dollar notes is 5.75%. With an issue price of 99.06%, the yield to maturity is 5.875%. The Euro notes were issued at their nominal value with a coupon of 5.25%. Proceeds from the offering will be used to repay indebtedness, for acquisitions including the company’s recently announced acquisition of Euromedic’s dialysis service business (IDC) and for general corporate purposes.

As the chart shows, further larger scale refinancing within the Fresenius Group is only due in 2012.

Fresenius SE & Co. KGaA has a commercial paper program under which up to €250 million in short-term notes can be issued. No commercial papers were outstanding as of December 31, 2010 and December 31, 2009.

FINANCIAL POSITION – FIVE-YEAR OVERVIEW


€ in millions 2010 2009 2008 2007 2006
1 Trade accounts receivable and inventories, less trade accounts payable and payments received on accounts
Operating cash flow 1,911 1,553 1,074 1,296 1,052
as % of sales 12.0 11.0 8.7 11.4 9.8
Working capital1 3,577 3,088 2,937 2,467 2,322
as % of sales 22.4 21.8 23.8 21.7 21.5
Investments in property, plant and equipment, net 733 662 736 662 571
Cash flow before acquisitions and dividends 1,178 891 338 634 481
as % of sales 7.4 6.3 2.7 5.6 4.5

€ in millions 2010 2009 2008 2007 2006
1 Trade accounts receivable and inventories, less trade accounts payable and payments received on accounts
Operating cash flow 1,911 1,553 1,074 1,296 1,052
as % of sales 12.0 11.0 8.7 11.4 9.8
Working capital1 3,577 3,088 2,937 2,467 2,322
as % of sales 22.4 21.8 23.8 21.7 21.5
Investments in property, plant and equipment, net 733 662 736 662 571
Cash flow before acquisitions and dividends 1,178 891 338 634 481
as % of sales 7.4 6.3 2.7 5.6 4.5

The Fresenius Group has drawn about €4.6 billion of bilateral and syndicated credit lines. In addition, the Group had approximately €2.0 billion in unused credit lines as of December 31, 2010 (including committed credit lines of €1.4 billion) available. These credit facilities are generally used for covering working capital needs and are – with the exception of the former Fresenius SE 2008 credit agreement and the Fresenius Medical Care 2006 credit agreement − usually unsecured.

As of December 31, 2010, both the former Fresenius SE and Fresenius Medical Care AG & Co. KGaA, including all subsidiaries, complied with the covenants under all the credit agreements.

Detailed information on the Fresenius Group’s financing can be found in the notes 21-23.

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