Rogers 2010 Annual Report Download - page 97

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT 101
(D) REDEMPTION OF SENIOR NOTES:
On August 27, 2010, the Company redeemed the entire outstanding
principal amount of its U.S.$490 million ($516 million) 9.625% Senior
Notes due 2011 at the prescribed redemption price of 105.999% of the
principal amount effective on that date. The Company incurred a loss
on the repayment of the Senior Notes aggregating $39 million,
including aggregate redemption premiums of $31 million, a net loss on
the termination of the associated swaps of $16 million, offset by a
write-down of a previously recorded fair value increment of $8 million.
Concurrently with this redemption, on August 27, 2010, the Company
terminated the associated Derivatives aggregating U.S.$500 million
notional principal amount, including the U.S.$10 million notional
principal amount which were not accounted for as hedges. The
Company made a net payment of approximately $269 million to
terminate these Derivatives.
On August 31, 2010, the Company redeemed the entire outstanding
principal amount of its $460 million 7.625% Senior Notes due 2011 at
the prescribed redemption price of 107.696% of the principal amount
effective on that date. The Company incurred a loss on repayment of
the Senior Notes of $35 million.
On August 31, 2010, the Company redeemed the entire outstanding
principal amount of its $175 million 7.25% Senior Notes due 2011 at the
prescribed redemption price of 107.219% of the principal amount
effective on that date. The Company incurred a loss on repayment of
the Senior Notes of $13 million.
The total loss on repayment of the Senior Notes was $87 million for the
year ended December 31, 2010.
As a result of these redemptions, the Company paid an aggregate of
approximately $1,230 million, including approximately $1,151 million
aggregate principal amount and $79 million for the premiums payable
in connection with the redemptions.
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.
(E) UNSECURED OBLIGATIONS:
Prior to the Company’s reorganization completed on July 1, 2010, RCl’s
public debt originally issued by Rogers Cable Inc. had 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 RCl’s public debt originally
issued by Rogers Wireless Inc. had RWP as a co-obligor and RCCI as an
unsecured guarantor. Similarly, RCCI and RWP had provided unsecured
guarantees for the public debt issued directly by RCI, the bank credit
facility and the Derivatives. Accordingly, RCI’s bank credit facility, senior
public debt and Derivatives ranked pari passu on an unsecured basis.
Prior to its redemption in December 2009, RCI’s U.S.$400 million 8.00%
Senior Subordinated Notes were subordinated to its senior debt.
July 1, 2010 corporate reorganization:
On June 30, 2010, RWP changed its name to Rogers Communications
Partnership (“RCP”). On July 1, 2010, the Company completed a
reorganization which included the amalgamation of RCI and 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 Derivatives. Following the amalgamation, RCI
continues to be the obligor in respect of each of the Company’s bank
credit facility, public debt and Derivatives, 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. RCl’s and RCP’s
respective obligations under the bank credit facility, the public debt
and the Derivatives continue to rank pari passu on an unsecured basis.
(F) FAIR VALUE INCREMENT (DECREMENT) ARISING FROM
PURCHASE ACCOUNTING:
The fair value increment (decrement) 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 (decrement)
is amortized over the remaining term of the related debt and recorded
as part of interest expense. The fair value increment (decrement),
applied to the specific debt instruments to which it relates, results in
the following carrying values at December 31, 2010 and 2009 of the
debt in the Company’s consolidated accounts:
2010 2009
Senior Notes, due 2011 9.625% $ – $ 533
Senior Notes, due 2011 7.625% –460
Senior Notes, due 2012 7.250% 469 495
Senior Notes, due 2014 6.375% 738 774
Senior Notes, due 2015 7.500% 549 579
Total $ 1,756 $ 2,841