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Management's discussion and analysis (“MD&A”) COGECO CABLE INC. 2013 33
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL STRUCTURE
The table below summarizes debt-related financial ratios over the last two fiscal years and the fiscal 2014 guidelines.
Years ended August 31, 2014
Guidelines 2013 2012
Average cost of indebtedness(1) 4.2% 4.1% 5.9%
Fixed rate indebtedness(2) 70% 66% 100%
Average term: long-term debt (in years) 5.5 6.4 5.3
Net secured indebtedness(3)(4) / operating income before depreciation and amortization(5) N/A (7) 2.6 1.3
Net indebtedness(4)(6) / operating income before depreciation and amortization(5) N/A (7) 3.4 1.4
Operating income before depreciation and amortization(5) / financial expense(5) N/A (7) 6.2 9.2
(1) Excludes amortization of financing fees and commitments fees but includes impact of interest rate swaps.
(2) Taking into consideration the interest rate swaps in effect at the end of each fiscal year.
(3) Net secured indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments,
less cash and cash equivalents and principal on Senior Unsecured Debenture and Senior Unsecured Notes.
(4) Excluding Atlantic Broadband’s cash and cash equivalents and non-recourse First Lien Credit Facilities.
(5) Calculation excludes Atlantic Broadband and includes PEER 1 results for the seven-month period ended August 31, 2013.
(6) Net indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt, balance due on a business combination and obligations under
derivative financial instruments, less cash and cash equivalents.
(7) Guidance on these ratios cannot be provided given that Atlantic Broadband's segmented financial guidance are not provided.
For fiscal 2013, the average tenure of the long-term debt increased as a result of the issuance of the Senior Secured Debentures Series 4 due
May 2023, the Senior Secured Notes due June 2025 and the Senior Unsecured Notes due May 2020, as described previously.
In fiscal 2014, the financial leverage ratios relating to net indebtedness and net secured indebtedness over operating income before depreciation
and amortization should decline due to the projected increase in operating income before depreciation and amortization, combined with a reduction
in Indebtedness from generated free cash flow. The financial expense coverage ratio should increase as a result of the projected increase in
operating income before depreciation and amortization. During fiscal 2015, we expect the consolidated financial leverage ratio relating to net
indebtedness to decline to 3.0x.
OUTSTANDING SHARE DATA
A description of Cogeco Cable’s share data at September 30, 2013 is presented in the table below. Additional details are provided in note 16 of
the consolidated financial statements.
Number of
shares/options
Amount
(in thousands
of dollars)
Common shares
Multiple voting shares 15,691,100 98,346
Subordinate voting shares 33,205,623 903,167
Options to purchase subordinate voting shares
Outstanding options 725,093
Exercisable options 382,676
FINANCING
On July 5, 2013, Cogeco Cable reduced its Term Revolving Facility from $750 million to $600 million. On October 26, 2012 , the Corporation
amended its Term Revolving Facility to extend the maturity by an additional year and consequently, the Term Revolving Facility will mature on
November 22, 2017. On November 22, 2011, the Corporation renewed its credit agreement for a $750 million credit facility, with an option to
increase to a total amount of up to $1 billion, subject to lenders' participation, in the form of a five-year Term Revolving Facility, which may be
extended by additional one-year periods on an annual basis, subject to lenders' approval. The Term Revolving Facility is available in Canadian,
US or Euro currencies and includes a swingline of $25 million available in Canadian or US currencies. The Term Revolving Facility was originally
supposed to mature on November 22, 2016. The Term Revolving Facility requires commitment fees, and interest rates are based on bankers'
acceptance, LIBOR in Euros or in US dollars, bank prime rate loan or US base rate loan plus the applicable margin.The Term Revolving Facility
is indirectly secured by a first priority fixed and floating charge on substantially all present and future real and personal property and undertaking
of every nature and kind of the Corporation and certain of its subsidiaries, and provides for certain permitted encumbrances, including purchased