Focus Media Banking Concern Loans

Focus Media has accounts that suggest it is massively cash generative. According to their accounts they are sitting on over $500 i M m inward cash - inward this illustration all inward Renminbi.

They every bit good accept expanding banking concern loans - at i time over USD200 million.  These loans are made inward USA dollars backed past times LOCs issued past times a Chinese bank.

I accept heard several (contradictory) theories for why these transactions were made inward this manner.

I figured if I pose this disclosure upwards readers mightiness suggest fifty-fifty to a greater extent than contradictory theories inward their comments.

At to the lowest degree that is what I am looking for.



John...

14. Bank Loans

		Notes		December 31, 2011
Short -term revolving loan		a)		$	100,000,000
Long -term revolving loan		b)			71,000,000
Total				$	171,000,000
Additional available long -term loan facilities		b)		$	29,000,000

a)

The short-term revolving loan is denominated inward U.S. Dollars, was obtained from a large commercial establishment exterior of the China (“Bank A”), together with is secured past times a stand-by alphabetic quality of credit issued past times China based fiscal establishment (“Bank B”). The stand-by alphabetic quality of credit is secured past times short-term deposits of RMB628,030,000 (equivalent to $99,673,063), which is recorded every bit restricted cash on the Group’s residual sheet. The Group paid RMB 4,095,000 (equivalent to $649,907) to Bank B to result the stand-by alphabetic quality of credit to Bank A. The short-term revolving loan bears interest, which is payable monthly, at the charge per unit of measurement of two-week LIBOR summation 2.1% per annum. The weighted average involvement charge per unit of measurement of this loan for the twelvemonth ended Dec 31, 2011 was closed to 2.4%. The short-term loan is payable inward Nov 2012.

b)

The long -term revolving loan is denominated inward U.S. Dollars, was obtained from Bank A, together with is secured past times a stand-by alphabetic quality of credit issued past times Bank B. The stand-by alphabetic quality of credit is secured past times restricted long-term deposits of RMB 628,030,000 (equivalent to $99,673,063) deposited inward Bank B, The deposit is recorded every bit restricted cash on the Group’s residual sheet. The Group paid RMB 3,965,000 (equivalent to $629,275) to Bank B to result the stand-by alphabetic quality of credit required past times Bank A, The costs incurred inward connecter amongst the stand-by alphabetic quality of credit are existence amortized to involvement expense over the term of the loan. The loan bears interest, which is payable monthly, at the charge per unit of measurement of two-week LIBOR summation 2.1%, 2.4% together with 2.7% per annum for each of the twelve months ending December 8, 2012, 2013 together with 2014, respectively. The weighted average involvement charge per unit of measurement of this loan for the twelvemonth ended Dec 31, 2011 was well-nigh 2.4%. The main of the loan is payable inward 2 installments of $17,750,000 together with $53,250,000, which are due inward Dec 2013 together with Dec 2014, respectively.

Neither the short-term or long-term banking concern loan contains fiscal covenants.

Source: here.