17. Convertible Bonds On 30 July 2008 the Company issued 350 subordinated unsecured callable convertible bonds at a par value of USD 100,000 each totaling USD 35 million, bearing 8.5% interest per annum. The interest is payable semi-annually in arrears on 30 January and 30 July each year. The bonds mature five years from issue date at their nominal value of USD 35 million or can be converted into a total of 10,802,470 shares at the holders’ option at a conversion price of USD 3.24 per share. The conversion price is subject to adjustment upon certain changes of the Company’s share capital and in case of mergers and de-mergers. The convertible bond has been accounted for in separate components – the value of the liability component has been recognized at its fair value and the remaining part as equity. In measuring fair value of the liability component an estimated market rate (estimated to be 13%) for a similar debt without a conversion right has been used in discounting the cash flow under the loan agreement. The estimated market rate was based on valuations of the interest rate for a non-convertible bond at the date of drawing the loan. There will be no re-measuring of the fair value of the liability and equity components. At issue date the following amounts were recognized for the convertible bond in the financial statements: Fair Value of liability component Fair Value of equity component
USD 28,750,623 USD 5,024,377 USD 33,775,000 The difference between the funds received and the total amount shown above as recognized on issue is due to the issue costs associated with the issue of the bonds. Issue costs amortized and interest accrued for the convertible bond loan are as per below;
Years ended (In thousands of USD)
31-Dec-08
31-Dec-09
999
381
1,380
Interest payable incurred
2,975
1,240
4,215
Interest paid
2,975
-
2,975
Issue costs amortized
78
31-Dec-09
Total as of