Rogers 2008 Annual Report Download - page 110

106 ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
prime rate or base rate or 0.625% to 3.25% per annum over the
bankers’ acceptance rate or LIBOR.
(iv) Cancelled Media bank credit facility:
Prior to its repayment and cancellation in June 2007, Media’s
bank credit facility provided Media with up to $600 million
from a consortium of Canadian financial institutions.
Borrowings under this facility were available to Media for
general corporate purposes on a fully revolving basis until the
facility was cancelled. The interest rates charged on this credit
facility ranged from the bank prime rate or U.S. base rate plus
nil to 2.0% per annum and the bankers’ acceptance rate or
LIBOR plus 1.0% to 3.0% per annum.
(D) SENIOR NOTES AND DEBENTURES AND SENIOR
SUBORDINATED NOTES:
Interest is paid semi-annually on all of the Company’s notes and
debentures.
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 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, 2008, the
fair value of this prepayment option is $4 million (2007 – $13 million).
(E) FAIR VALUE INCREMENT 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 to the specific debt instruments to which it relates, results
in the following carrying values at December 31, 2008 and 2007 of
the debt in the Company’s consolidated accounts:
Partnership (“RWP”), a wholly owned subsidiary, as an unsecured
guarantor while the Rogers Communications Inc. public debt
originally issued by Rogers Wireless Inc. 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 Swaps. Accordingly, Rogers Communications
Inc.’s bank debt, senior public debt and Cross-Currency Swaps now
rank pari passu on an unsecured basis. The Company’s subordinated
public debt remains subordinated to its senior debt.
(C) BANK CREDIT FACILITY:
(i) Corporate bank credit facility:
The RCI credit facility provides the Company 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 0.5% per annum
over the bank prime rate or base rate or 0.475% to 1.75%
over the bankers’ acceptance rate or the London Inter-Bank
Offered Rate (“LIBOR”). The Company’s bank credit facility
is unsecured and ranks pari passu with the Company’s senior
public debt and Cross-Currency Swaps. The bank credit facility
requires that the Company satisfy certain financial covenants,
including the maintenance of certain financial ratios.
(ii) Cancelled Wireless bank credit facility:
Prior to its repayment and cancellation in June 2007, Wireless’
bank credit facility provided Wireless with up to $700 million
from a consortium of Canadian financial institutions. Interest
rates under the bank credit facility ranged from the bank
prime rate or base rate to the bank prime rate or base rate plus
1.75% per annum, the bankers’ acceptance rate plus 1.0% to
2.75% per annum and LIBOR plus 1.0% to 2.75% per annum.
(iii) Cancelled Cable bank credit facility:
Prior to its repayment and cancellation in June 2007, Cable’s
bank credit facility provided 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 were available on a fully revolving basis until maturity
on July 2, 2010, and there were no scheduled reductions prior
to maturity. The interest rate charged on the Cable bank credit
facility ranged from nil to 2.0% per annum over the bank
2008 2007
Senior Notes, due 2011 9.625% $ 621 $ 507
Senior Notes, due 2011 7.625% 461 461
Senior Notes, due 2012 7.25% 577 466
Senior Notes, due 2014 6.375% 905 728
Senior Notes, due 2015 7.50% 675 545
Senior Subordinated Notes, due 2012 8.00% 489 397
Total $ 3,728 $ 3,104