Rogers 2010 Annual Report Download - page 43

ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT 47
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Debt Redemptions and Termination of Derivatives
On August 27, 2010 RCI redeemed all of the US$490 million principal
amountofits9.625%SeniorNotesdue2011(the“9.625%Notes”)and
on August 31, 2010 RCI redeemed all of the $460 million principal
amountofits7.625%SeniorNotesdue2011(the“7.625%Notes”)and
$175millionprincipalamount of7.25%SeniorNotesdue2011(the
“7.25%Notes”and,togetherwiththe9.625%Notesand7.625%Notes,
the “2011 Notes”). RCI paid an aggregate of approximately $1,230
million for the redemption of the
2011 Notes (the “Redemptions”),
including approximately $1,151
million aggregate principal
amount for the 2011 Notes and
$79 million for the premiums
payable in connection with the
Redemptions. Concurrently with
RCI’s redemption of the 9.625%
Notes, RCI made a net payment of
approximately $269 million to
terminate the associated
Derivatives (the “Derivatives
Termination”). As a result, the
total cash expenditure associated
with the Redemptions and the
Derivatives Termination was
$1,499 million and RCI recorded a
loss on repayment of long-term
debt of $87 million, comprised of
the aggregate redemption
premiums of $79 million and a net loss on the termination of the related
Derivatives of $16 million, partially offset by a gain of $8 million related
to the non-cash write-down of the fair value increment of long-
term debt.
At December 31, 2010, the undrawn portion of our bank credit facility
was approximately $2.4 billion, excluding letters of credit of $94
million. This liquidity position is further enhanced by the fact that our
earliest scheduled debt maturity is in May2012.
On February 18, 2011 RCI announced that it had issued notices to
redeem on March 21, 2011 all of the US$350 million principal amount of
7.875%SeniorNotesdue2012andalloftheUS$470millionprincipal
amountof7.25%SeniorNotesdue2012,ineachcaseattheapplicable
redemption price plus accrued interest to the date of redemption. In
each case, the respective redemption price will include a make whole
premium based on the present value of the remaining scheduled
payments as prescribed in the applicable indenture.
Shelf Prospectuses
In November 2009, we filed two shelf prospectuses with securities
regulators to qualify debt securities of RCI, one for the sale of up to
Cdn$4 billion of debt securities in Canada and the other for the sale of
up to US$4 billion in the United States and Ontario. Each of these shelf
prospectuses expire in December 2011. To date, we have issued an
aggregate $1.7 billion of debt securities in Canada pursuant to the
Cdn$4 billion shelf prospectus. The notice set forth in this paragraph
does not constitute an offer of any securities for sale.
July 1, 2010 Corporate Reorganization
On June 30, 2010, Rogers Wireless Partnership changed its name to
Rogers Communications Partnership. On July 1, 2010, the Company
completed a reorganization which included the amalgamation of RCI
and Rogers Cable Communications Inc. (“RCCI”) and another of RCI’s
wholly-owned subsidiaries forming one amalgamated company under
the name Rogers Communications Inc. Following this amalgamation,
certain of the operating assets and operating liabilities of the
amalgamated company together with all of its employees were
transferred to RCP, subject to certain exceptions. The amalgamated
company did not transfer its interests or obligations in or under: equity
interests in any subsidiaries; long-term debt; derivative instruments;
real estate assets; and intercompany notes.
As a result of this reorganization, effective July 1, 2010, RCP holds
substantially all of the Company’s shared services and Cable and
Wireless operations. Reporting will continue to reflect the Cable and
Wireless services as separate operating segments.
In addition, RCCI ceased to be a separate legal entity on July 1, 2010 as a
result of the amalgamation and effective July 1, 2010 RCCI is no longer
a guarantor or obligor, as applicable, for the Company’s bank credit
facility, public debt and derivative instruments. RCI continues to be the
obligor in respect of each of these, while RCP remains either a
co-obligor or guarantor, as applicable, for the public debt and a
guarantor for the bank credit facility and Derivatives. The Company’s
respective obligations under the bank credit facility, the public debt
and the derivative instruments continue to rank pari passu on an
unsecured basis.
There has been no impact on Media as a result of this reorganization.
Normal Course Issuer Bid
On February 17, 2010, we announced that the Toronto Stock Exchange
had accepted a notice filed by RCI of our intention to renew our NCIB
for a further one-year period commencing February 22, 2010 and
ending February 21, 2011, and during such one-year period we may
purchase on the TSX up to the lesser of 43.6 million Class B Non-Voting
shares and that number of Class B Non-Voting shares that can be
purchased under the NCIB for an aggregate purchase price of $1.5
billion. The actual number of Class B Non-Voting shares purchased
under the NCIB and the timing of such purchases will be determined by
RCI considering market conditions, stock prices, its cash position, and
other factors.
In 2010, we purchased an aggregate 37,080,906 Class B Non-Voting
shares for an aggregate purchase price of $1,312 million. Of these
shares, 14,480,000 were purchased pursuant to private agreements
between RCI and arm’s length third party sellers for an aggregate
purchase price of $482 million. These purchases were made under an
issuer bid exemption order issued by the Ontario Securities Commission
and are included in calculating the number of Class B Non-Voting shares
that RCI may purchase pursuant to the NCIB.
In 2009, we purchased an aggregate 43,776,200 Class B Non-Voting
shares for an aggregate purchase price of $1,347 million. Of these
shares, 1,051,000 comprising $34 million of the aggregate purchase
price were purchased and recorded in December 2009 but were settled
in early January 2010. In addition, 10,280,000 of the shares were
purchased by RCI pursuant to private agreements between RCI and
certain arm’s-length third party sellers for an aggregate purchase price
of $285 million. These purchases were made under an issuer bid
exemption order issued by the Ontario Securities Commission and are
included in calculating the number of Class B Non-Voting shares that
RCI may purchase pursuant to the NCIB.
In February 2011, we announced that the Toronto Stock Exchange has
accepted a notice filed by RCI of our intention to renew our NCIB for
our Class B Non-Voting shares for a further one-year period
commencing February 22, 2011 and ending February 21, 2012, and that
during such one-year period we may purchase on the TSX up to the
lesser of 39.8 million Class B Non-Voting shares and that number of
Class B Non-Voting shares that can be purchased under the NCIB for an
aggregate purchase price of $1.5 billion. The actual number of Class B
Non-Voting shares purchased under the NCIB and the timing of such
purchases will be determined by management considering market
conditions, stock prices, our cash position and other factors.
On February 22, 2011, we purchased for cancellation, pursuant to a
private agreement between the Company and an arm’s-length third
20102009
2008
2009
200
8
201
0
2.1x2.1x2.1x
RATIO OF DEBT TO
ADJUSTED OPERATING PROFIT