Debt strategy

Hydro intends to keep funds from operations of at least 40 percent of net adjusted interest-bearing debt in addition to net adjusted interest-bearing debt at a ratio of 0.55 to equity capital over time.

Definitions

Funds from operations (FFO): 
• Net income attributable to parent
• Plus depreciation and amortization
• Plus deferred taxes

Net adjusted interest-bearing debt:
• Short-term and long-term interest-bearing debt
• Less cash and cash equivalents and short-term investments
• Plus net pension liability after tax
• Plus net discounted operating lease commitments
• Plus share of net debt in joint ventures (equity accounted investments)

Terms

Substantially all of Hydro’s indebtedness is situated in the parent company, Norsk Hydro ASA. In general, the terms of each of the debt agreements and indentures governing the indebtedness have contained the following:

• Cross-default provisions
• Provisions restricting the pledging of assets to secure future borrowings without granting equivalent status to existing lenders
• No financial ratio covenants
• No provisions connected to Hydro’s credit rating or value of underlying assets
• No lender-right to demand repayment prior to scheduled maturity

Currently Hydro has no outstanding bonds.