Rogers 2009 Annual Report Download - page 102

106 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On December 15, 2009, the Company redeemed the entire
outstanding principal amount of its U.S.$400 million ($424 million)
8.00% Senior Subordinated Notes due 2012 at the prescribed
redemption price of 102% of the principal amount effective on that
date. The Company incurred a net loss on repayment of the Senior
Subordinated Notes aggregating $7 million, including aggregate
redemption premiums of $8 million offset by a write-down of a
previously recorded fair value increment of $1 million.
(D) UNSECURED OBLIGATIONS:
The Company’s outstanding public debt, $2.4 billion bank credit
facility and Derivatives are unsecured obligations of RCI. RCI’s
public debt originally issued by Rogers Cable Inc. has Rogers
Cable Communications Inc. (“RCCI”), a wholly owned subsidiary,
as a co-obligor and Rogers Wireless Partnership (“RWP”), a wholly
owned subsidiary, as an unsecured guarantor while RCI’s 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 public debt issued directly
by RCI, the bank credit facility and the Derivatives. Accordingly,
RCI’s bank debt, senior public debt and Derivatives rank pari passu
on an unsecured basis. Prior to its redemption in December 2009,
the Company’s U.S.$400 million 8.00% Senior Subordinated Notes
were subordinated to its senior debt.
(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, 2009 and 2008 of
the debt in the Company’s consolidated accounts:
(F) WEIGHTED AVERAGE INTEREST RATE:
The Company’s effective weighted average interest rate on all
long-term debt, as at December 31, 2009, including the effect of all
of the derivative instruments, was 7.27% (2008 – 7.29%).
(G) PRINCIPAL REPAYMENTS:
As at December 31, 2009, principal repayments due within each
of the next five years and thereafter on all long-term debt are as
follows:
2010 $ 1
2011 1,150
2012 862
2013 368
2014 1,156
Thereafter 4,921
$ 8,458
Coincident with the maturity of the Company’s U.S. dollars
denominated long-term debt, certain of the Company’s Derivatives
also mature (note 15(d)(iii)).
(H) FOREIGN EXCHANGE:
Foreign exchange gains related to the translation of long-term
debt recorded in the consolidated statements of income totalled
$126 million (2008 – loss of $65 million).
(I) TERMS AND CONDITIONS:
The provisions of the Company’s $2.4 billion bank credit facility
described above impose certain restrictions on the operations and
activities of the Company, the most significant of which are debt
maintenance tests.
In addition, certain of the Company’s Senior Notes and Debentures
described above (including the Company’s 9.625% Senior Notes due
2011, 7.875% Senior Notes due 2012, 6.25% Senior Notes due 2013 and
8.75% Senior Debentures due 2032) contain debt incurrence tests as
well as restrictions upon additional investments, sales of assets and
payment of dividends, all of which are suspended in the event the
public debt securities are assigned investment grade ratings by at
least two of three specified credit rating agencies. As at December
31, 2009, all of these public debt securities were assigned an
investment grade rating by each of the three specified credit rating
agencies and, accordingly, these restrictions have been suspended
for so long as such investment grade ratings are maintained. The
Company’s other Senior Notes and its Senior Subordinated Notes
do not contain any such restrictions, regardless of the credit ratings
for such securities.
In addition to the foregoing, the repayment dates of certain
debt agreements may be accelerated if there is a change in control
of the Company.
At December 31, 2009 and 2008, the Company was in compliance with
all of the terms and conditions of its long-term debt agreements.
2009 2008
Senior Notes, due 2011 9.625% $ 533 $ 621
Senior Notes, due 2011 7.625% 460 461
Senior Notes, due 2012 7. 250% 495 577
Senior Notes, due 2014 6.375% 774 905
Senior Notes, due 2015 7.500% 579 675
Senior Subordinated Notes, due 2012 8.000% –489
Total $ 2,841 $ 3,728