Jun 26, 2012. /Lesprom Network/. Since 2007, PaperlinX has used various financial instruments to protect against exchange rate movements between the GBP/A$. The purpose was to mitigate substantial exchange rate volatility in an Australian currency intercompany borrowing by its UK subsidiary, as well as to protect a European banking covenant against movements in the GBP/A$ exchange rate. The current option instrument was to expire in late June 2012, as the company said in the press release received by Lesprom Network. This intercompany loan was established in 2007 as part of the SPS Hybrid financing structure. It has been re-domiciled from a UK subsidiary to an Australian group company, the effect of which is to remove the exchange rate risk and the need for future exchange rate protection. As a consequence, PaperlinX has closed out the existing currency option instrument and realised the cash proceeds of approximately A$39 million. The repayment and restructuring of intercompany debt in conjunction with the re-domiciling of the intercompany loan will provide additional banking covenant headroom in Europe and a reduced interest rate margin on borrowings, and is expected to provide opportunities for improved financing arrangements and margins in Europe.