Long-term debt and obligations under capital lease

Long-term debt consists of the following:



	September 30, 2012	December 31, 2011
	$’000	$’000
Loans from banks and other parties collateralized by property, plant and equipment payable over periods of one to 20 years, with a weighted average interest rate of 4.17% and 4.32%, respectively	511,736	538,730
Obligations under capital lease	5,086	5,158

	516,822	543,888
Less: Current portion	51,023	77,058

	465,799	466,830

In connection with the renovation of El Encanto hotel, OEH entered into a loan agreement in August 2011 for $45,000,000 to be drawn as construction progresses. During the nine months ended September 30, 2012, OEH borrowed $17,458,000 (December 31, 2011 - $Nil) under this facility. The loan has a maturity of three years, with two one-year extensions, at an annual interest rate based on monthly LIBOR plus 3.65%.

Also, on September 12, 2012, OEH drew a new loan facility of €35,000,000 ($44,400,000) to refinance €36,844,000 ($46,757,000) of long-term debt maturing in 2013 secured by the two Sicilian hotels. The loan matures in three years and bears interest at a rate of EURIBOR plus 5% per annum. OEH has entered into interest rate swaps to fix the variable interest rate of the full amount on the loan at 5.59%.

At September 30, 2012, one of OEH’s subsidiaries had not complied with certain financial covenants in a loan facility. The $2,037,000 outstanding on this loan has been classified as current and OEH expects to rectify this non-compliance in the fourth quarter of 2012. In addition, two unconsolidated joint venture companies were out of compliance with certain financial covenants in their loan facilities. See Note 6.

Most of OEH’s loan facilities relate to specific hotel or other properties and are secured by a mortgage on the particular property. In most cases, the Company is either the borrower or the subsidiary owning the property is the borrower, with the loan guaranteed by the Company.

The loan facilities generally place restrictions on the property-owning company’s ability to incur additional debt and limit liens, and restrict mergers and asset sales, and include financial covenants. Where the property-owning subsidiary is the borrower, the financial covenants relate to the financial performance of the property financed and generally include covenants relating to interest coverage, debt service, and loan-to-value and debt-to-EBITDA tests. Most of the facilities under which the Company is the borrower or the guarantor also contain financial covenants which are based on the performance of OEH on a consolidated basis. The covenants include a quarterly interest coverage test and a quarterly net worth test.

The following is a summary of the aggregate maturities of consolidated long-term debt, including obligations under capital lease, at September 30, 2012:



Year ending December 31,		$’000
2013		48,486
2014		155,233
2015		216,129
2016		4,423
2017		13,971
2018 and thereafter		27,557

		465,799

The debt of Charleston Center LLC, a consolidated VIE, of $89,192,000 (December 31, 2011 - $90,529,000) is non-recourse to OEH and separately disclosed on the consolidated balance sheet. See Note 3.