Rogers 2006 Annual Report Download - page 100

96 R OGE RS COM MUN I C ATIO NS I NC . 2 0 0 6 AN NUAL R EPO R T
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Borrowings under the credit facility are secured by the pledge of a
senior bond issued under a deed of trust, which is secured by sub-
stantially all the assets of Wireless and certain of its subsidiaries,
subject to certain exceptions and prior liens.
(ii) Senior Notes and Debentures:
Each of Wireless’ Senior Secured Notes and Debentures is secured by
the pledge of a senior bond that is secured by the same security as
the security for the bank credit facility described in note 15(a)(i) and
ranks equally with the bank credit facility.
Interest is paid semi-annually on all of Wireless’ notes and debentures,
with the exception of Wireless’ Floating Rate Senior Secured Notes
for which Wireless pays interest on a quarterly basis.
Each of Wireless’ Senior Secured Notes and Debentures and Senior
Subordinated Notes is redeemable, in whole or in part, at Wireless’
option, at any time, subject to a certain prepayment premium. The
following two note issues have specific prepayment premiums.
Wireless’ U.S. $550 million of Floating Rate Senior Secured Notes are
redeemable in whole or in part, at Wireless’ option, at any time on or
after December 15, 2006 at 102.0% of the principal amount, declining
ratably to 100.0% of the principal amount on or after December 15,
2008, plus, in each case, interest accrued to the redemption date.
The Company pays interest on the Floating Rate Notes at LIBOR plus
3.125%, reset quarterly.
Wireless’ U.S. $400 million Senior Subordinated Notes are redeem-
able in whole or in part, at Wireless’ option, at any time up to
December 15, 2008, subject to a certain prepayment premium and
at any time on or after December 15, 2008 at 104.0% of the principal
amount, declining ratably to 100.0% of the principal amount on or
after December 15, 2010.
(iii) Fair value inc rement arising from purchase accounting:
The fair value increment on long-term debt is a purchase accounting
adjustment required by GAAP as a result of the acquisition of the
minority interest of Wireless during 2004. Under GAAP, the purchase
method of accounting requires that the assets and liabilities of
an acquired enterprise be revalued to fair value when allocating
the purchase price of the acquisition. This fair value increment is
recorded only on consolidation at the RCI level and is not recorded
in the accounts of Wireless. The fair value increment is amortized
over the remaining term of the related debt and recorded as part
of interest expense. The fair value increment, applied against the
specific debt instruments of Wireless to which it relates, results in
the following carrying values at December 31, 2006 and 2005 of the
Wireless debt in the Company’s consolidated accounts:
2006 2005
Senior Secured Notes, due 2006 10.50% $ – $ 162
Senior Secured Notes, due 2010 Floating 643 644
Senior Secured Notes, due 2011 9.625% 600 606
Senior Secured Notes, due 2011 7.625% 461 462
Senior Secured Notes, due 2012 7.25% 551 551
Senior Secured Notes, due 2014 6.375% 859 857
Senior Secured Notes, due 2015 7.50% 644 644
Senior Secured Debentures, due 2016 9.75% 192 193
Senior Subordinated Notes, due 2012 8.00% 468 468
Total $ 4,418 $ 4,587
(B) CABLE:
(i) Bank c redit facility:
Cable’s bank credit facility provides Cable with up to $1 billion of
available credit, comprised of a $600 million Tranche A credit facility
and a $400 million Tranche B credit facility, both of which are avail-
able on a fully revolving basis until maturity on July 2, 2010 and there
are no scheduled reductions prior to maturity.
In July 2006, Cable entered into an amendment to its bank credit
facility to insert provisions for the springing release of security in a
similar fashion as provided in all of Cable’s public debt indentures.
This provision provides that if Cable has two investment grade ratings
on its debt and there is no other debt or cross-currency interest rate
exchange agreement secured by a bond issued under the Cable deed
of trust, then the security provided for a particular debt instrument
will be discharged upon 45 days’ prior notice by Cable. A similar
amendment has also been made in each of Cable’s cross-currency
interest rate exchange agreements.
Cable’s bank credit facility is secured by the pledge of a senior bond
issued under a deed of trust which is secured by substantially all of
the assets of Cable and certain of its subsidiaries, subject to certain
exceptions and prior liens. In addition, under the terms of an inter-
creditor agreement, the proceeds of any enforcement of the security
under the deed of trust would be applied first to repay any obli-
gations outstanding under the Tranche A credit facility. Additional
proceeds would be applied pro rata to repay all other obligations of
Cable secured by senior bonds, including the Tranche B credit facility
and all of Cable’s Senior Secured Notes and Debentures.
Cable’s bank credit facility requires, among other things, that Cable
satisfy certain financial covenants, including the maintenance of
certain financial ratios. The interest rate charged on the bank credit
facility ranges from nil to 2.0% per annum over the bank prime rate
or base rate or 0.625% to 3.25% per annum over the bankers’ accep-
tance rate or LIBOR.