bunge 2004 annual report notes to the consolidated  financial statements 22. redeemable preferred stock 78 First Capital is a separate legal entity from Bunge and has  separate assets and liabilities. First Capital retained the right  to redeem the preferred stock, in whole or in part, for the issue price plus accrued and unpaid dividends. In November 2004, First Capital exercised its right and redeemed the 170,000 redeemable preferred shares for $170 million plus accrued  Also, certain of Bunge’s subsidiaries have provided guarantees of indebtedness of certain of their subsidiaries under certain lines of credit with various institutions. The total borrowing capacity under these lines of credit was $327 million as of December 31, 2004, of which $6 million was outstanding as of such date. In addition, Bunge has issued parent level guarantees for the repayment of certain of senior notes and senior credit facilities, which were issued or entered into by its wholly owned subsidiaries, with a carrying amount of $2,278 million at December 31, 2004. All outstanding debt related to these guarantees is included in the consolidated balance sheets at December 31, 2004 (see Note 17). There are no significant restrictions on the ability of Bunge Limited Finance Corp. or any other Bunge subsidiary to transfer funds  to Bunge. In 2000, Bunge First Capital Limited (First Capital), a consolidated subsidiary of Bunge, issued 170,000 $.01 par value shares of cumulative variable rate redeemable preferred shares to private investors for $170 million. First Capital used the net proceeds  of $163 million to make loans to subsidiaries of Bunge for their working capital requirements. The results of First Capital are included in Bunge’s consolidated financial statements and all intercompany transactions are eliminated. The holders of the preferred shares were entitled to receive cumulative variable rate cash dividends paid quarterly. The amount of the dividend was calculated based on alternative benchmark financing rates, certain actual expenses and a return. If more than one quarterly dividend went unpaid, and on the occurrence of certain other events, the preferred shareholders were entitled to require First Capital to arrange for the sale of the preferred stock to third parties on behalf of the preferred shareholders based on the issue price plus accrued and unpaid dividends, or take certain other actions to protect the interests of the preferred shareholders. freight supply agreements In the ordinary course of business, Bunge enters into purchase commitments for time on ocean freight vessels and freight service on railroad lines for the purpose of transporting agricultural commodities. In addition, Bunge sells the time on these ocean freight vessels when excess freight capacity is available. These agreements typically range from  two months to six years, in the case of ocean freight vessels, depending on market conditions and 10 to 23 years in the  case of railroad services. Future minimum payments due under these agreements are $547 million, $348 million, $256 million, $266 million and $284 million, for the years 2005 to 2009, respectively, and $4,182 million thereafter. Actual amounts paid under these contracts may differ due to the variable components of these agreements and the amount of income earned on the sales of excess capacity. The cost of Bunge’s freight supply agreements is passed through to its customers in the ordinary course of business and as a result such cost is expected to be fully recovered. guarantees Bunge has issued or was a party to the following guarantees at December 31, 2004: (3) Bunge issued guarantees to a financial institution in Brazil related to amounts owed the institution by certain of its customers. The terms of the guarantees are equal to the terms of the related financing arrangements, which can be  as short as 120 days or as long as 360 days. In the event that the customers default on their payments to the institutions and Bunge would be required to perform under the guarantees, Bunge has obtained collateral from the customers. At December 31, 2004, $64 million of these financing arrangements were collateralized by tangible property. Bunge has determined the fair value of  these guarantees to be immaterial at December 31, 2004. (2) Prior to January 1, 2003, Bunge issued a guarantee to a financial institution related to debt of its joint ventures in Argentina, its unconsolidated affiliates.  The term of the guarantee is equal to the term of the related financing, which matures in 2009. There are no recourse provisions or collateral that would enable Bunge to recover any amounts paid under this guarantee. (1) Prior to January 1, 2003, Bunge entered into synthetic lease agreements for barges and railcars originally owned by Bunge and subsequently sold to third parties. The leases are classified as operating leases in accordance with  SFAS No. 13,  Accounting for Leases. Any gains on the sales were deferred and recognized ratably over the initial lease terms. Bunge has the option under each lease to purchase the barges or railcars at fixed amounts, based on estimated fair values or to sell the assets. If Bunge elects to sell, it will receive proceeds up to fixed amounts specified in the agreements. If the proceeds of such sales are less than the specified fixed amounts, Bunge would be obligated under  a guarantee to pay supplemental rent for the deficiency in proceeds up to a maximum of approximately $69 million at December 31, 2004. The operating leases expire through 2007. There are no recourse provisions or collateral that would enable Bunge to recover any amounts paid under this guarantee. Maximum Potential (US$ in millions) Future Payments Operating lease residual values (1) $$ 6699 Unconsolidated affiliates financing (2) 2222 Customer financing (3) 116666 Total $$ 225577