11. Mandatorily Redeemable Trust Preferred Securities
In June 2001, the Company issued trust preferred securities through Fresenius Medical Care Capital Trusts, statutory trusts organized under the laws of the State of Delaware. FMC AG & CO. KGAA owns all of the common securities of these trusts. The sole asset of each trust is a senior subordinated note of FMC AG & CO. KGAA or a wholly-owned subsidiary of FMC AG & CO. KGAA. FMC AG & CO. KGAA, D-GmbH and FMCH have guaranteed payment and performance of the senior subordinated notes to the respective Fresenius Medical Care Capital Trusts. The trust preferred securities are guaranteed by FMC AG & CO. KGAA through a series of undertakings by the Company, FMCH and D-GmbH.
The trust preferred securities entitle the holders to distributions at a fixed annual rate of the stated amount and are mandatorily redeemable after 10 years, which is scheduled to occur on June 15, 2011. Earlier redemption at the option of the holders may also occur upon a change of control followed by a rating decline or defined events of default including a failure to pay interest. Upon liquidation of the trusts, the holders of trust preferred securities are entitled to a distribution equal to the stated amount. The trust preferred securities do not hold voting rights in the trust except under limited circumstances.
The indentures governing the notes held by the Fresenius Medical Care Capital Trusts contain affirmative and negative covenants with respect to the Company and its subsidiaries and other payment restrictions. Some of the covenants limit the Company’s indebtedness and its investments, and require the Company to maintain certain ratios defined in the indentures. As of December 31, 2010, the Company is in compliance with all financial covenants under all trust preferred securities agreements.
The trust preferred securities outstanding as of December 31, 2010 and 2009 are as follows:
Trust Preferred Securities |
||||||
|---|---|---|---|---|---|---|
in THOUS, except stated amounts, in $ |
||||||
Year issued |
Stated amount |
Interest rate |
Mandatory
redemption
date |
2010 |
2009 |
|
| Fresenius Medical Care Capital Trust IV | 2001 | 225.000 $ | 7 ⅞% | Jun. 15, 2011 | 224,835 | 224,451 |
| Fresenius Medical Care Capital Trust V | 2001 | 300.000 € | 7 ⅜% | Jun. 15, 2011 | 400,714 | 431,645 |
TOTAL |
625,549 | 656,096 | ||||