Rogers 2007 Annual Report Download - page 49

ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 45
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• additionstoprogramrightsof$67million;
• nancingcostsincurredof$4million;and
• therepaymentof$2millionofcapitalleases.
Taking into account the cash deficiency of $19 million at the begin-
ning of the year and the cash sources and uses described above, the
cash deficiency at December 31, 2007 was $61 million.
Financing
Our long-term debt is described in Note 15 to the 2007 Audited
Consolidated Financial Statements. During 2007, the following
financing activities took place.
During 2007, $1,080 million aggregate net advances were bor-
rowed under our bank credit facility. In addition, during 2007
$1,227 million aggregate principal amount of other debt was repaid,
comprised of $450 million aggregate principal amount of Cable’s
7.60% Senior Notes due 2007 repaid at maturity in February, $609 mil-
lion (US$550 million) aggregate principal amount of Wireless’ Floating
Rate Senior Notes due 2010 redeemed in May at a redemption pre-
mium of 2%, or $12 million, for a total of $621 million (US$561 million),
$166 million (US$155 million) aggregate principal amount of Wireless’
9.75% Senior Debentures due 2016 redeemed in June at a redemp-
tion premium of 28.416%, or $47 million, for a total of $213 million
(US$199 million) and $2 million repayment of capital leases. As a
result, we incurred a net loss on repayment of long-term debt
aggregating $47 million, which is expensed in the income state-
ment. Included in this amount are the aggregate redemption
premiums of $59 million offset by a $12 million non-cash writedown
of the fair value increment arising from purchase accounting, which
is included in long-term debt. In addition, in conjunction with these
redemptions we made aggregate net payments on settlement
of cross-currency interest rate
exchange agreements and for-
ward contracts of $35 million.
We may choose to participate in
the upcoming auction of wire-
less spectrum licences that will
take place commencing May 27,
2008, and, as such, we may
arrange for the issuance of a
letter of credit pursuant to the
terms and conditions of the auc-
tion. If issued, the letter of credit
would be a utilization under our
$2.4 billion bank credit facility.
See “Wireless Regulation and
Regulatory Developments –
Advanced Wireless Ser vices
(“AWS”) Auction”.
RCI’s $2.4 Billion Bank Credit Facility
On June 29, 2007, the $1 billion Cable bank credit facility, the
$700 million Wireless bank credit facility and the $600 million Media
bank credit facility were cancelled and RCI entered into a new unse-
cured $2.4 billion bank credit facility. At December 31, 2007, RCI had
borrowed $1.240 billion under this new bank credit facility.
RCI’s new bank credit facility provides RCI with up to $2.4 billion
from a consortium of Canadian financial institutions. The bank
credit facility is available on a fully revolving basis until maturity
on July 2, 2013, and there are no scheduled reductions prior to
maturity. The interest rate charged on the bank credit facility
ranges from nil to 0.50% per annum over the bank prime rate or
base rate or 0.475% to 1.75% over the bankers’ acceptance rate or
London Inter-bank Offered Rate (“LIBOR”). RCI’s bank credit facility
is unsecured and ranks pari passu with RCI’s senior public debt and
cross-currency interest rate exchange agreements. The bank credit
facility requires that RCI satisfy certain financial covenants, includ-
ing the maintenance of certain financial ratios.
Pari Passu Debt and Intracompany Amalgamation completed
July 1, 2007
On July 1, 2007, RCI completed an intracompany amalgamation of
RCI and certain of its wholly owned subsidiaries, including Rogers
Cable Inc. (“RCAB”) and Rogers Wireless Inc. (“RWI”). The amal-
gamated entity continues as RCI, and RCAB and RWI are no longer
separate corporate entities and have ceased to be reporting issuers.
This intracompany amalgamation did not impact the consolidated
results previously reported by RCI, and the operating subsidiaries
of RCAB and RWI were not part of and were not impacted by the
amalgamation.
As a result of the amalgamation, on July 1, 2007, RCI assumed all
of the rights and obligations under all of the outstanding RCAB
and RWI public debt indentures and cross-currency interest rate
exchange agreements. As part of the amalgamation process, on
June 29, 2007, RCAB and RWI released all security provided by
bonds issued under the RCAB deed of trust and the RWI deed of
trust for all of the then outstanding RCAB and RWI senior public
debt and cross-currency interest rate exchange agreements. As a
result, none of the senior public debt or cross-currency interest rate
exchange agreements remain secured by such bonds effective as of
June 29, 2007.
As a result of these actions, the outstanding public debt and
cross-currency interest rate exchange agreements and the new
$2.4 billion bank credit facility now reside at RCI on an unsecured
basis. The RCI public debt originally issued by Cable has RCCI as
a co-obligor and RWP as an unsecured guarantor while the RCI
public debt originally issued by RWI has RWP as a co-obligor and
RCCI as an unsecured guarantor. Similarly, RCCI and RWP have
provided unsecured guarantees for the new bank credit facility
and the cross-currency interest rate exchange agreements.
Accordingly, RCI’s bank debt, senior public debt and cross-currency
interest rate exchange agreements now rank pari passu on an unse-
cured basis. Our subordinated public debt remains subordinated to
our senior debt.
Shelf Prospectuses
In order to maintain financial flexibility, in November 2007 RCI filed
shelf prospectuses with securities regulators to qualify debt securi-
ties of RCI for sale in Canada and/or in the U.S. A previously filed
shelf prospectus expired during 2006. The notice set forth in this
paragraph does not constitute an offer of any securities for sale.
20072006
2.1x2.7x3.8x
RATIO OF DEBT TO
ADJUSTED OPERATING PROFIT*
200
6
2007
2005
* Includes debt and the foreign exchange
component of the fair value of derivative
instruments.