Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Borrowings

v3.21.1
Borrowings
12 Months Ended
Jan. 03, 2021
Borrowings [Abstract]  
Borrowings
15. Borrowings

    2020     2019  
Secured line of credit with Banamex, for up to Ps. 400,000, bearing interest at the TIIE rate plus 260 basis points. Withdrawals from this line of credit can be made during a 10-month period starting December 15, 2018, and are payable on a quarterly basis from December 17, 2019 up to December 18, 2025.   Ps. 373,333       135,209  
                 
Secured line of credit with Banamex for up to Ps. 195,000, bearing interest at the TIIE rate plus 295 basis points, payable on a quarterly basis from October 30, 2020 to December 30, 2025.     188,500       -  
                 
Line of credit with BBVA for up to Ps. 75,000 bearing interest at 7.5%, payable monthly from September 20, 2020 to August 31, 2023     64,721       -  
                 
Line of credit with MCRF P, S.A. de C.V. SOFOM, E.N.R. of Ps. 600,000, bearing interest at a fixed rate of 13.10%. This line of credit is payable on a quarterly basis starting May 15, 2019 through May 15, 2023. BLSM Latino América Servicios, S.A. de C.V., is a guarantor in this loan.     -       516,597  
                 
Unsecured line of credit with Banamex, for up to Ps. 80,000, bearing interest at the TIIE rate plus 285 basis points (renewable on a yearly basis).     -       15,000  
                 
Interest payable   Ps. 3,323       10,907  
                 
Total debt     629,877       677,713  
                 
Less: Current portion     105,910       148,070  
                 
Long-term debt   Ps. 523,967       529,643  

On January 30, 2020, the Group renegotiated the interest rate of the secured line of credit with Banamex, which changed from the TIIE rate plus 317 basis points to the TIIE rate plus 260 basis points. In addition, withdrawals from this line of credit were extended to August 2020, and are payable on a quarterly basis from September 2020 up to December 18, 2025.


On March 10, 2020, Betterware entered into a current account credit agreement with HSBC México, S.A., for an amount of Ps. 50,000, with provisions by means of promissory notes specifying payment of principal and interest. BLSM is jointly liable for this credit. On May 4, 2020, the first ammendment agreement was signed, in which the amount of the line of credit was increased to Ps. 150,000. The maturity date of this line of credit is March 10, 2022, and it bears interest at the TIIE rate plus 350 basis points. During 2020, the Group utilized Ps. 115,000, of which as of January 3, 2021 the entire amount has been repaid. 


On March 25, 2020, the Group withdrew Ps. 74,000 from its secured line of credit with Banamex.


On March 27, 2020, the Group made a prepayment to the line of credit with MCRF P, S.A. de C.V. SOFOM, E.N.R of Ps. 258,750. In addition, on April 27, 2020, the Group paid the outstanding amount of the line of credit.


On April 13, 2020, the Group withdrew Ps. 100,000 from its secured line of credit with Banamex.


On July 30, 2020 a total amount of Ps. 195,000 was withdrawn from a credit agreement signed on June 3, 2020 with Banamex. This loan bears interest at the TIIE rate plus 295 basis points maturing on December 30, 2025.


On September 20, 2020, the Group entered into a line of credit with BBVA for up to Ps. 75,000 bearing interest at 7.5%, payable monthly. The line of credit has racks in the Group’s distribution center pledged as collateral for an amount of Ps. 80,901.


As of January 3, 2021 and December 31, 2019, the fair value of the borrowings amounted to Ps. 634,992 and Ps. 679,188, respectively. Fair value was calculated using the discounted cash flow method and the Interbank Equilibrium Interest Rate (TIIE), adjusted for credit risk, and used to discount future cash flows.


As of January 3, 2021, the interest rate spread of the Banamex unsecured credit line of up to Ps. 80,000 amounted to TIIE plus 285 basis points. As of December 31 of 2019, the interest rate was TIIE plus 275 basis points.


Interest expenses related to the borrowings presented above are included in the interest expense item in the consolidated and combined statement of earnings and other comprehensive income.


Reconciliation of movements of liabilities to cash flows arising from financing activities


The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated and combined statement of cash flows as cash flows from financing activities.


    Long-term debt     Interest payable     Derivative
financial
instruments, net
 
                   
Balances as of January 1, 2019   Ps. 620,164       11,227       16,629  
Changes that represent cash flows -                        
Loans obtained     104,500       -       -  
Restricted cash(1)     22,940       -       -  
Payments     (82,996 )     (95,033 )     -  
                         
Changes that do not represent cash flows -                        
Interest expense     -       85,429       -  
Borrowing costs capitalized in PP&E     -       9,284       -  
Valuation effects of derivative financial instruments     -       -       15,680  
Amortization of commissions and debt issuance costs     2,198       -       -  
                         
Balances as of December 31, 2019   Ps. 666,806       10,907       32,309  
Changes that represent cash flows -                        
Loans obtained     1,712,207                  
Restricted cash(1)     (42,915 )                
Payments     (1,757,112 )     (121,297 )        
Changes that do not represent cash flows -                        
Interest expense     -       80,253       -  
Borrowing costs capitalized on PP&E     -       33,460       -  
Valuation effects of derivative financial instruments     -       -       287,985  
Amortization of commissions and debt issuance cost     4,653       -       -  
Balances as of January 3, 2021   Ps. 583,639       3,323       320,294  

(1) Balances in column “Long-term debt” in the table above, are netted with restricted cash balances.
   

The Group’s long-term debt maturities as of January 3, 2021, including non-accrued interest, are as follows:


Year   Amount  
       
2022   Ps. 126,736  
2023     118,915  
2024     114,187  
2025     270,356  
    Ps. 630,194  

The line of credit agreements with Banamex contain the following financial covenants:


a) To maintain a short-term debt coverage ratio not lower than 1.5.

b) To maintain a total debt coverage ratio not greater than 3.0.

c) To maintain a leverage ratio not greater than 7.0.

d) To maintain a minimum cash and cash equivalents balance of Ps. 40,000

The Group was in compliance with all covenants as of January 3, 2021 and December 31, 2019. The Group obtained permission from Banamex prior to December 31, 2019 to consummate the merger disclosed in Note 1.b.