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ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ii) The Company’s U.S. $400 million Senior Subordinated Notes
are redeemable in whole or in part, at the Company’s 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.
At December 31, 2007, the fair value of this prepayment option
is $13 million (note 2(h)(i)(C)).
(D) 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. 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 to which it relates,
results in the following carrying values at December 31, 2007 and
2006 of the debt in the Company’s consolidated accounts:
(C) SENIOR NOTES AND DEBENTURES AND SENIOR
SUBORDINATED NOTES:
Interest is paid semi-annually on all of the Company’s notes and
debentures, with the exception of the Floating Rate Senior Notes,
for which interest was paid on a quarterly basis.
Each of the Company’s Senior Notes and Debentures and Senior
Subordinated Notes is redeemable, in whole or in part, at the
Company’s option, at any time, subject to a certain prepayment
premium. The following two note issues have specific prepayment
premiums:
(i) The Company’s U.S. $550 million of Floating Rate Senior
Notes were redeemable in whole or in part, at the Company’s
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
paid interest on the Floating Rate Notes at LIBOR plus 3.125%,
reset quarterly. These notes were redeemed by the Company
on May 3, 2007.
2007 2006
Floating Rate Senior Notes, due 2010 Floating $ – $ 643
Senior Notes, due 2011 9.625% 507 600
Senior Notes, due 2011 7.625% 461 461
Senior Notes, due 2012 7.25% 466 551
Senior Notes, due 2014 6.375% 728 859
Senior Notes, due 2015 7.50% 545 644
Senior Debentures, due 2016 9.75% – 192
Senior Subordinated Notes, due 2012 8.00% 397 468
Total $ 3,104 $ 4,418
(E) DEBT REPAYMENTS:
(i) On February 6, 2007, the Company repaid at maturity,
the aggregate principal amount outstanding of Cable’s
$450 million 7.60% Senior Notes.
On May 3, 2007, the Company redeemed the aggregate
principal amount outstanding of Wireless’ U.S. $550 million
($609 million) Floating Rate Senior Notes due 2010 at a
redemption premium of 2%, or $12 million.
On June 21, 2007, the Company redeemed the aggregate
principal amount outstanding of Wireless’ U.S. $155 million
($166 million) 9.75% Senior Debentures due 2016 at a
redemption premium of 28.416%, or $47 million.
The Company incurred a net loss on repayment of long-term
debt in 2007 aggregating $47 million, including aggregate
redemption premiums of $59 million offset by a write down
of a previously recorded fair value increment of $12 million. In
addition, in conjunction with these redemptions, the Company
made aggregate net payments on settlement of cross-currency
interest rate exchange agreements and forward contracts of
$35 million (note 16(a)).
(ii) During 2006, the Company redeemed or repaid an aggregate
$261 million principal amount of Senior Notes and Senior
Secured Notes as well as a mortgage and capital leases in the
aggregate principal amount of $25 million. A prepayment
premium of $1 million was also incurred as part of these
repayments.
(F) WEIGHTED AVERAGE INTEREST RATE:
The Company’s effective weighted average interest rate on all
long-term debt, as at December 31, 2007, including the effect of
all of the derivative instruments, was 7.53% (2006 – 7.98%).
(G) PRINCIPAL REPAYMENTS:
As at December 31, 2007, principal repayments due within each
of the next five years and thereafter on all long-term debt are
as follows:
2008 $ 1
2009 –
2010 –
2011 1,119
2012 1,206
Thereafter 3,690