During 2010, the Group completed the rebuilding of its financial platform. It secured the refinancing of all of its debt at attractive terms and extended its debt maturity profile substantially. In January 2010 the Group's residual €270 million 2011 Euro facility was refinanced with a heavily oversubscribed seven-year 6.25% £350 million unrated Sterling bond, which was subsequently awarded an investment grade rating by Moody's and Fitch in March 2010. In June and July the Group refinanced its residual £800 million 2011 bank facility, firstly with the issue of a ten-year 6.625% £225 million Sterling bond and then with a £500 million unsecured revolving credit facility ("RCF") committed until August 2014 by the Group's relationship banks. The RCF is attractively priced, currently at LIBOR plus 1.45%, and will primarily be used for seasonal working capital, growth and headroom purposes.
With these arrangements now in place, the Group has no requirement to refinance its debt before 2014. At 31 December 2010, the Group had available cash and undrawn committed financing facilities of £517.8 million (2009: £409.0m). Net debt during the year decreased to £610.4 million (2009: £657.9m) through continued focus on cash generation. As a result, the Group's headroom against its principal banking covenants continued to improve, as follows:
- debt gearing ratio (adjusted net debt to EBITDA): 2.1x (2009: 2.5x; covenant not to exceed 3.5x); and
- interest cover ratio (EBITDA to net interest): 6.9x (2009: 6.5x; covenant not to be less than 3.5x).
As the Group's debt is now entirely denominated in Sterling, foreign currency forward and swap contracts were utilised to create synthetic debt positions to hedge the exposure of our Spanish and North American earnings and assets. At 31 December 2010, the value of this synthetic debt was €275 million and US$165 million respectively. The forward contracts had a maturity date of 20 January 2011 and have been rolled forward since the balance sheet date. No gain or loss was attached to the value of these instruments in the financial statements. Further details of the Group's treasury management policies are set out in the Accounts.
The Group's principal defined benefit pension schemes are all in the UK. At 31 December 2010, these schemes reflected a substantial improvement in the combined deficit under IAS19 of £10.4 million (2009: £54.9m). The decrease in the deficit balances during the year was principally through appreciation in investment asset values during the period, together with the benefit of deficit recovery plans.
Under IAS 19, in UK Bus (under the West Midlands Passenger Transport Authority Pension Fund and the Tayside Transport Superannuation Fund), the deficit at 31 December 2010 was £5.3 million (2009: £46.4m deficit). There was no IAS19 deficit in UK Coach (under the National Express Group Staff Pension Plan), compared to the 2009 deficit of £5.2 million. The Group's UK Rail business participates in the Railways Pension Scheme; the deficit exposure in the UK Rail division was £3.7 million (2009: £1.9m deficit) and would transfer to the incoming operator in the event of franchise termination. All deficits tend to be greater when measured on a scheme actuarial basis and are funded through the deficit payment plans.