16Loans and financings
Accounting policy
Loans and financings are recognized initially at fair value, net of transaction costs incurred, and are subsequently carried at amortized cost. Any difference between the proceeds (net of transaction costs) and the total amount payable is recognized in the income statement over the period of the loans using the effective interest rate method.
Loans and financings are classified as current liabilities unless the Company has the unconditional right to defer repayment of the liability for at least 12 months after the reporting period.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Loans and financing costs directly related to the acquisition, construction or production of a qualifying asset that requires a substantial period of time to prepare for its intended use or sale are capitalized as part of the cost of that asset when it is probable that future economic benefits associated with the item will flow to the Company and costs can be measured reliably. The other loans and financing costs are recognized as financial expenses in the period in which they are incurred.
(a)Analysis and maturity profile
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Current |
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Non-current |
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Total |
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Fair value |
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||||||||
|
Type |
|
Average annual charges |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
Eurobonds - USD |
|
5.19% fixed USD |
|
8,778 |
|
4,054 |
|
1,032,664 |
|
343,000 |
|
1,041,442 |
|
347,054 |
|
1,120,901 |
|
342,156 |
|
|
Debt with banks |
|
LIBOR 3M + 2.57% /LIBOR 6M + 2.51% |
|
435 |
|
24,038 |
|
199,179 |
|
662,743 |
|
199,614 |
|
686,781 |
|
214,293 |
|
712,371 |
|
|
BNDES |
|
TJLP + 2.68% / 4.74% fixed BRL / SELIC + 2.78% / UMBNDES + 2.44% |
|
19,795 |
|
32,619 |
|
73,653 |
|
67,672 |
|
93,448 |
|
100,291 |
|
85,969 |
|
86,908 |
|
|
Debentures |
|
107.77% CDI |
|
8,885 |
|
504 |
|
32,403 |
|
3,822 |
|
41,288 |
|
4,326 |
|
41,405 |
|
4,235 |
|
|
Export credit note |
|
118.00% CDI / LIBOR 3M + 1.85% |
|
1,102 |
|
— |
|
61,622 |
|
— |
|
62,724 |
|
— |
|
64,058 |
|
— |
|
|
FINEP |
|
TJLP + 0.68% |
|
677 |
|
682 |
|
2,062 |
|
2,743 |
|
2,739 |
|
3,425 |
|
2,640 |
|
3,038 |
|
|
FINAME |
|
4.59% fixed BRL |
|
398 |
|
407 |
|
1,383 |
|
1,804 |
|
1,781 |
|
2,211 |
|
1,604 |
|
1,828 |
|
|
Other |
|
5,93% fixed USD |
|
771 |
|
297 |
|
3,492 |
|
— |
|
4,263 |
|
297 |
|
4,262 |
|
349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,841 |
|
62,601 |
|
1,406,458 |
|
1,081,784 |
|
1,447,299 |
|
1,144,385 |
|
1,535,132 |
|
1,150,885 |
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|
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Current portion of long term loans and financing (principal) |
|
28,019 |
|
57,137 |
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Interest on loans and financing |
|
12,822 |
|
5,464 |
|
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|
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||
|
|
|
40,841 |
|
62,601 |
|
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BNDES |
— |
Brazilian National Bank for Economic and Social Development |
|
BRL |
— |
Brazilian Reais |
|
CDI |
— |
Interbank Deposit Certificate |
|
FINAME |
— |
Government Agency for Machinery and Equipment Financing |
|
TJLP |
— |
Long Term Interest Rate set by the Brazilian National Monetary Council, the TJLP is the basic cost of financing of the BNDES |
|
UMBNDES |
— |
Monetary unit of the BNDES, reflecting the weighted basket of currencies of foreign currency debt obligations. At December 31, 2017, the basket was 99% comprised of US Dollars. |
|
SELIC |
— |
Brazilian System for Clearance and Custody |
|
FINEP |
— |
Funding Authority for Studies and Projects |
The maturity profile of loans and financing at December 31, 2017, was as follows:
|
|
|
Principal amount |
|
||||||||||||||||
|
|
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
As from |
|
Total |
|
|
Eurobonds - USD |
|
— |
|
— |
|
— |
|
— |
|
— |
|
343,000 |
|
— |
|
700,000 |
|
1,043,000 |
|
|
Debt with banks |
|
— |
|
31,111 |
|
84,444 |
|
84,444 |
|
— |
|
— |
|
— |
|
— |
|
199,999 |
|
|
BNDES |
|
19,732 |
|
23,379 |
|
16,288 |
|
12,703 |
|
9,500 |
|
5,284 |
|
3,067 |
|
4,251 |
|
94,204 |
|
|
Debentures |
|
8,119 |
|
8,119 |
|
8,119 |
|
8,119 |
|
8,119 |
|
— |
|
— |
|
— |
|
40,595 |
|
|
Export credit note |
|
— |
|
— |
|
61,623 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
61,623 |
|
|
FINEP |
|
669 |
|
669 |
|
669 |
|
669 |
|
56 |
|
— |
|
— |
|
— |
|
2,732 |
|
|
FINAME |
|
395 |
|
392 |
|
374 |
|
315 |
|
231 |
|
70 |
|
1 |
|
|
|
1,778 |
|
|
Other |
|
772 |
|
818 |
|
866 |
|
918 |
|
889 |
|
— |
|
— |
|
— |
|
4,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,687 |
|
64,488 |
|
172,383 |
|
107,168 |
|
18,795 |
|
348,354 |
|
3,068 |
|
704,251 |
|
1,448,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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Interest accrual and costs |
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||||||||||||||||
|
|
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
As from |
|
Total |
|
|
Eurobonds - USD |
|
8,778 |
|
(1,177 |
) |
(1,227 |
) |
(1,280 |
) |
(1,337 |
) |
(1,172 |
) |
(1,160 |
) |
(2,983 |
) |
(1,558 |
) |
|
Debt with banks |
|
435 |
|
(281 |
) |
(281 |
) |
(258 |
) |
— |
|
— |
|
— |
|
— |
|
(385 |
) |
|
BNDES |
|
63 |
|
(225 |
) |
(179 |
) |
(165 |
) |
(109 |
) |
(60 |
) |
(34 |
) |
(47 |
) |
(756 |
) |
|
Debentures |
|
767 |
|
(31 |
) |
(25 |
) |
(9 |
) |
(9 |
) |
— |
|
— |
|
— |
|
693 |
|
|
Export credit note |
|
1,101 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,101 |
|
|
FINEP |
|
7 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
7 |
|
|
FINAME |
|
3 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
3 |
|
|
Other |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,154 |
|
(1,714 |
) |
(1,712 |
) |
(1,712 |
) |
(1,455 |
) |
(1,232 |
) |
(1,194 |
) |
(3,030 |
) |
(895 |
) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Total |
|
||||||||||||||||
|
|
|
2018 |
|
2019 |
|
2020 |
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
As from |
|
Total |
|
|
Eurobonds - USD |
|
8,778 |
|
(1,177 |
) |
(1,227 |
) |
(1,280 |
) |
(1,337 |
) |
341,828 |
|
(1,160 |
) |
697,017 |
|
1,041,442 |
|
|
Debt with banks |
|
435 |
|
30,830 |
|
84,163 |
|
84,186 |
|
— |
|
— |
|
— |
|
— |
|
199,614 |
|
|
BNDES |
|
19,795 |
|
23,154 |
|
16,109 |
|
12,538 |
|
9,391 |
|
5,224 |
|
3,033 |
|
4,204 |
|
93,448 |
|
|
Debentures |
|
8,886 |
|
8,088 |
|
8,094 |
|
8,110 |
|
8,110 |
|
— |
|
— |
|
— |
|
41,288 |
|
|
Export credit note |
|
1,101 |
|
— |
|
61,623 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
62,724 |
|
|
FINEP |
|
676 |
|
669 |
|
669 |
|
669 |
|
56 |
|
— |
|
— |
|
— |
|
2,739 |
|
|
FINAME |
|
398 |
|
392 |
|
374 |
|
315 |
|
231 |
|
70 |
|
1 |
|
— |
|
1,781 |
|
|
Other |
|
772 |
|
818 |
|
866 |
|
918 |
|
889 |
|
— |
|
— |
|
— |
|
4,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,841 |
|
62,774 |
|
170,671 |
|
105,456 |
|
17,340 |
|
347,122 |
|
1,874 |
|
701,221 |
|
1,447,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4% |
|
4% |
|
12% |
|
7% |
|
1% |
|
24% |
|
0% |
|
48% |
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)Changes
|
|
|
2017 |
|
2016 |
|
|
Balance at the beginning of the year |
|
1,144,385 |
|
1,056,210 |
|
|
Payments |
|
(537,254 |
) |
(483,100 |
) |
|
New loans and financing |
|
837,819 |
|
550,966 |
|
|
Exchange variation |
|
(2,873 |
) |
17,834 |
|
|
Interest accrual |
|
69,481 |
|
38,511 |
|
|
Interest paid |
|
(57,038 |
) |
(35,689 |
) |
|
Addition of borrowing fees, net of amortization |
|
(7,221 |
) |
(347 |
) |
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
1,447,299 |
|
1,144,385 |
|
|
|
|
|
|
|
|
(c)Analysis by currency
|
|
|
Current |
|
Non-current |
|
Total |
|
||||||
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
US Dollar |
|
13,260 |
|
31,496 |
|
1,272,223 |
|
1,013,988 |
|
1,285,483 |
|
1,045,484 |
|
|
Real |
|
27,471 |
|
28,170 |
|
134,235 |
|
66,954 |
|
161,706 |
|
95,124 |
|
|
Currency basket |
|
110 |
|
2,935 |
|
|
|
842 |
|
110 |
|
3,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,841 |
|
62,601 |
|
1,406,458 |
|
1,081,784 |
|
1,447,299 |
|
1,144,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)Analysis by index
|
|
|
Current |
|
Non-current |
|
Total |
|
||||||
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
Fixed rate |
|
11,192 |
|
6,466 |
|
1,038,459 |
|
346,997 |
|
1,049,651 |
|
353,463 |
|
|
LIBOR |
|
610 |
|
24,037 |
|
230,573 |
|
662,743 |
|
231,183 |
|
686,780 |
|
|
TJLP |
|
12,509 |
|
23,078 |
|
35,341 |
|
41,632 |
|
47,850 |
|
64,710 |
|
|
UMBNDES |
|
3,211 |
|
6,042 |
|
5,496 |
|
9,087 |
|
8,707 |
|
15,129 |
|
|
CDI |
|
9,811 |
|
504 |
|
62,632 |
|
3,822 |
|
72,443 |
|
4,326 |
|
|
BNDES Selic |
|
3,508 |
|
2,474 |
|
33,957 |
|
17,503 |
|
37,465 |
|
19,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,841 |
|
62,601 |
|
1,406,458 |
|
1,081,784 |
|
1,447,299 |
|
1,144,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)Guarantees and covenants
At December 31, 2017, US$ 1,063,784 (2016: US$ 780,579) of the borrowing was guaranteed by sureties, US$ 1,781 (2016: US$ 2,211) by fiduciary liens and the total amount of debentures is insured by real collateral.
The Company has borrowings agreements that are subject to financial covenants at the Company´s level, and also at the level of its controlling shareholder, VSA (by virtue that VSA is the guarantor of the BNDES borrowings). The borrowing agreements of debt with banks are subject to compliance with financial ratio rules (covenants), such as: (i) the gearing ratio (net debt/adjusted EBITDA); (ii) the capitalization ratio (total debt/total debt + equity or equity/total assets); and (iii) interest coverage ratio (cash + adjusted EBITDA/interest + short-term debt). When applicable, these compliance obligations are standardized for all borrowing agreements.
At December 31, 2017, the Company and its controlling shareholder were in compliance with all applicable covenants. If VSA breaches its covenants, the Company needs to present to BNDES a guarantee of 130% of the amount borrowed.
New borrowing
On May 4, 2017, the Company issued a US$ 700,000 ten-year bond. See note 1 (ii) for more details.
(f)Subsidiary bonds
The Company’s subsidiary NEXA PERU conducted a bond offering in the international market for US$ 350,000 on March 28, 2013. These financial instruments have a term of ten years and will be redeemed on March 28, 2023, at an annual fixed interest rate of 4.625% to be paid semi-annually. A portion of the proceeds obtained was used to settle bank borrowings.
(g)Revolving Credit Facility
The Company contracted in June 2015 a revolving credit facility amounting US$ 225,000, which falls due in June 2020. The credit is available and can be used anytime. As at December 31, 2017, the Company did not use the credit facility.