Nokia 2009 Annual Report Download - page 257

33. Risk management (Continued)
(c) Liquidity Risk
Liquidity risk is defined as financial distress or extraordinary high financing costs arising due to a
shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and
require financing. Transactional liquidity risk is defined as the risk of executing a financial transaction
below fair market value, or not being able to execute the transaction at all, within a specific period of
time.
The objective of liquidity risk management is to maintain sufficient liquidity, and to ensure that it is
available fast enough without endangering its value, in order to avoid uncertainty related to financial
distress at all times.
Nokia guarantees a sufficient liquidity at all times by efficient cash management and by investing in
liquid interest bearing securities. The transactional liquidity risk is minimized by only entering
transactions where proper twoway quotes can be obtained from the market.
Due to the dynamic nature of the underlying business, Nokia and Nokia Siemens Networks aim at
maintaining flexibility in funding by keeping committed and uncommitted credit lines available.
Nokia and Nokia Siemens Networks manage their respective credit facilities independently and
facilities do not include crossdefault clauses between Nokia and Nokia Siemens Networks or any
forms of guarantees from either party. At the end of December 31, 2009 the committed facilities
totaled EUR 4 113 million.
The most significant existing Committed Facilities include:
Borrower(s):
Nokia Corporation: ......................... USD1923million Revolving Credit Facility,
maturing 2012
Nokia Siemens Networks Finance B.V. and Nokia
Siemens Networks Oy: ..................... EUR2000million Revolving Credit Facility,
maturing 2012
Nokia Siemens Networks Finance B.V.: .......... EUR750million Credit Facility, maturing 2013
USD 1 923 million Revolving Credit Facility of Nokia Corporation is used primarily for US and Euro
Commercial Paper Programs back up purposes. As at year end 2009, this facility was fully undrawn.
EUR 2 000 million Revolving Credit Facility of Nokia Siemens Networks Finance B.V. and Nokia Siemens
Networks Oy is used for general corporate purposes. The Facility includes financial covenants related
to gearing test, leverage test and interest coverage test of Nokia Siemens Networks. As of
31 December, 2009 EUR 49 million of the facility was utilized and all financial covenants were
satisfied. The EUR 750 million Credit Facility of Nokia Siemens Networks Finance B.V. was fully utilized
for general funding purposes.
As of December 31, 2009 the weighted average commitment fee on the committed credit facilities
was 0.70% per annum.
F83
Notes to the Consolidated Financial Statements (Continued)