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14. DEBT
In March 2011, Bunge completed the sale of $500 million aggregate principal amount of unsecured senior notes, which bear interest at 4.10% per year. The senior notes will mature on March 15, 2016. The senior notes were issued by Bunge’s 100% owned finance subsidiary, Bunge Limited Finance Corp., and are fully and unconditionally guaranteed by Bunge Limited. Interest on the senior notes is payable semi-annually in arrears in March and September of each year, commencing in September 2011. Bunge used the net proceeds from this offering of approximately $496 million, after deducting underwriters’ commissions and offering expenses, for general corporate purposes, including working capital.
In March 2011, Bunge entered into a syndicated, $1,750 million revolving credit agreement that matures on April 19, 2014. The credit agreement replaced the then existing $632 million three-year and $600 million 17-month revolving credit agreements scheduled to mature on April 16, 2011, which were terminated in accordance with their terms on March 23, 2011. Borrowings under the credit agreement bear interest at LIBOR plus an applicable margin ranging from 1.30% to 2.75%, based generally on the credit ratings of our senior long-term unsecured debt. Amounts under the credit agreement that remain undrawn are subject to a commitment fee payable quarterly on the average undrawn portion of the credit agreement at 35 percent of the applicable margin. There were $400 million of borrowings outstanding under this credit agreement at September 30, 2011.
Bunge had $475 million of term loans that matured and were repaid in August 2011.
In July 2010, Bunge redeemed certain senior notes and repaid certain term loans and subsidiary long-term debt with an aggregate principal amount of $827 million. These transactions resulted in a loss on extinguishment of debt of approximately $90 million, related to make-whole payments which was included in the condensed consolidated statements of income for the three and nine months ending September 30, 2010.
The fair value of Bunge’s long-term debt is based on interest rates currently available on comparable maturities to companies with credit standing similar to that of Bunge. The carrying amounts and fair value of long-term debt are as follows:
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September 30, 2011 |
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December 31, 2010 |
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Carrying |
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Carrying |
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(US$ in millions) |
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Value |
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Fair Value |
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Value |
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Fair Value |
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Long-term debt, including current portion |
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$ |
3,610 |
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$ |
3,906 |
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$ |
3,163 |
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$ |
3,407 |
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