B.A.T CAPITAL CORP01RATION
NOTES TO FINANCIAL STKTZMENTS
BASIS OF PRESENTATIO
ad
B.A.T Capital Corporation (the Company) is a wholly-owned
rise wholl ow@n
subsidiary of B.A.T Industries p.l.c. (.B.A.T Industries),
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@@"y @in= @rated @in D*@Ia"ra.
The Conpany issues debt, the proce, a of which are loaned to
B.A.T Industries and its subi r4.
@4 bQ---wkrqvr7j During 1991, funds were lent exclusively to B.A.T
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International Finance p.l.c. (BATIF) and to subsidiaries of BATUS
-owned
ly Holdings, Inc., previously BKTUS Inc., both wholly
subsidiaries of B.A.T industries. BAT±F operates as a finance
company for other companies in the B.A.T Industries group and
BATUS Holdings is the holding company for the U.S. tobacco
related interests of B.A.T industries. The company also has a
$10,000,000, 9.95% demand note receivable from BATUS Tobacco
Services, Inc., a wholly-own*d subsidiary of BATUS Holdings, Inc.
The commercial paper borrowings of the Company are
unconditionally guaranteed by B.A.T Industries.
Sone administrative expenses and al:1 guarantee fees (to B.A.T
industries) incurred by the company are paid or reimbursed by the
affiliated companies which borrow froathe Company.
The Coxqmny utilized three separate debt funding sources
during 1991: commercial paper, mediu3s term notes and a loan from
Farmers Group, Inc. and two of its underwriting exchanges.
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B.A.T INDUSTRIES P.LC. MINNESOTA DEPOSITORY COPY PRODUCED PURSUANT To I @nj.[). OF
CONSENT JUDGMENT DATED 5/8M IN STATE OF MMMSOTA, ET AL V. PHLIP AkRRIS, ET CASE No. Cl-944MS
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02/.11/92 10:52 L-5025688233 BV: Finance, 20 --- BAT Treasur@ e02
COKKLrRCIAL PAP
The weighted average interest rate (bond equivalent yield
basis) on commercial paper borrowings outstanding at December 31,
1991 and 1990 was 5.8% and 8.3%. respectively. Maturities ranged
fro"_tW_Ai_":W`a-Ys on commercial paper outstanding at December
31, 1991. La@ A V*(, r-7 L-P
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The Company issued sodium term notes for the first time in
May, 1991. The weighted average interest rat* (bond equivalent
yield basis) on medium term note borrowings outstanding at
December 31, 1991 was 8.7%. Maturities ranged from 2 years, 5
months to 6 years, S months on notes outstanding at December 31,
1991. -T P A vo. % 4er-y
FAFJOW WAN
In December, 1991, thin Company borrowed $400,000,000 from
"_e' Farmers Group, Inc. (a member of the B.A.T group of companies)
-and two of its unde,writing oxchanges. This loan van
subsequently increased to $407,000,000 in January, 1992. This
note bears interest from month-to-mont1% at the monthly average
money market yield of the Company's comimmial paper outstanding
during the calendar month exclusive of dealer commissions. The
weighted average interest rat* (bond equivalent yield basis) for
the loan outet and ing at December 31, 1991 was 5.7%.
The loan has an original maturity date of February 3, 1992
but con be extended month-to-sonth until the lender gives notice
to the Company that the loan will not be further extended. The
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loan was, in fact, eXtended beyond its original maturity date 4mul-
antisipat*4- that Chia I
0 hrWj- PsL--eff withd"-tb* curreft Year%
The following is a summary of certain data related to the
Company's borrowings (dollars in thouxeinds):
1991 1920 1999
Average daily borrowings:
commercial paper (par) $2.754,383 $2.363,522 $2.705,332
sodium term notes 93.155
Farmers loan 16,212
Maximus borrowings outstanding at
*M sonth-end during the y"r:
to ons raial paper (par) 2,965.784 2,998,714 2,969,021
sodium term notes 176,9qO
Farmers loan 400.00
gaightod average interest rate
(bond equivalent basis) an
daily borrovLnp outstanding
during the year-
to use rcial paper (par) 6.41 8.4% 9.4%
madium tors notes S.61
Farmers loan 5.41
UNUIRE) CREDIT LTK1-P8
The Company, RATIF and B.A.T Industries havelfacility
agreements with 33 banks under which an aggregate of $3.0 billion
may be borrowed. The Company generally has throe borrowing
options under the** agreements which range from same day
availability of funds (swinglino advances) to revolving credit
and *negotiated advance* borrowings which require throe business
days notice. Interest rates on the swingline facilities vary but
are typically stated at the prime rate, prime rate plus a spread
or Fed funds plus a spread. Interest rates on the revolving
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S.A..T INMWMIES P.LC. - MWESOTA DEPOWTOW COPY - PRODUCED PuRwAxT To I VILD. OF
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credit facility are priced at spreads of 10 to 25 basis points
above the London Interbank Offered Rate (LIBOR). Interest rates
on the negotiated advance facility are priced at a negotiated
spread versus LIBOR which will vary depending on the availability
of bank funds.
These agreements require the company, BATIF and/or B.A.T
industries to pay facility fees, regardless of usage, which vary
by agreement but range from 10 to 15 basis points per annum.
Borrowings made pursuant to the agreements are guaranteed by
B.A.T Industries. All agreements are long-term with expiration
dates ranging from March, 1994 to 3anuary, 1997, and may be
cancelled by the Company, BATIr or B.A.T Industries upon
appropriate notice. No borrowings were outstanding under the
agreement at December 31, 1901.
in addition, the Company has a collective agreement with
another group of 19 banks which enables the Con W y to borrow up
to $300 million for periods up to six months. The agreement,
which expires in December, 1992, provides for interest rates
based on the prime rat* or the Loondon Mnt*rbank Offered Rate plus
7.5 basis points, depending on the borrowing option selected by
the Company. Commitment fees, management fees and other omts
related to the Company's borrowings and options under the
agreement are paid by BATUS Tobacco Services, Inc.
At December 31, 1991, there were no borrowings outstanding
under this agreement.
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B.A.T ImOusTRiEs P.LC. - MmUMA DEPOSITORY COPY - PAMCED PURSUANT To VII.D. OF
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MEMO= -CMH F14W INFORKhTION
Cash paid for interest and income taxes for the year (in
thousands):
1991 1990 1969
Interest $ 240-1*6*-
Income Taxes 34
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G.A.T INDUSTRIES P.LC. MW*WTA DEPOSITORY COPY PRMCED PUFtsuANT To VILD. OF
CONSENT jUDGMENT DATED 51W" INSTATE OFA*NWSOTA, ErAL v. PHXPMMA% ETA CAsENo.Cl-94-MS