Debt is generally raised in the name of Wesfarmers and is supported by a corporate guarantee. In certain circumstances debt may be raised directly by a subsidiary or joint venture and will have separate security arrangements and financial covenants e.g. project financing. Other debt may also be secured but this is generally as a result of an acquisition where secured debt existed within the acquired company and new arrangements have not yet been put in place.
Wesfarmers has revolving cash advance and bank guarantee facilities for varying amounts with its long term relationship banks. These facilities also mature over a period of up to three years. The company regards the majority of these facilities as continuing facilities that will be extended on an ongoing basis. The pricing on the continuing facilities is generally reset to current market levels on an annual basis.
Lenders to the Wesfarmers Group receive the benefit of a Guarantee Deed Poll under which all wholly owned subsidiaries of Wesfarmers representing at least 5 per cent of EBITDA are guarantors. It is currently a requirement that the guarantor group represents at least 90 per cent of the Group's total assets and 90 per cent of its EBITDA. Regulated businesses, such as any Insurance business, are not a party to the guarantee and excluded from all calculations.
Wesfarmers bank debt funding facilities are subject to minimum leverage and interest cover ratio thresholds. Terms and conditions are consistent across all facilities. Generally, secured debt can not exceed a set percentage of total assets although the allowable percentage can exceed thresholds in certain circumstances e.g acquisitions.