Rogers 2011 Annual Report Download - page 53

MANAGEMENT’S DISCUSSION AND ANALYSIS
RATIO OF DEBT TO
ADJUSTED OPERATING PROFIT
2.1x2.1x2.2x
2009 20102011
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 U.S. $4 billion in the United States and Ontario. Each of these
shelf prospectuses expired in December 2011. To replace these
expiring shelf prospectuses, in December 2011 we filed two new 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 U.S. $4 billion in the
United States and Ontario. Each of the new shelf prospectuses expire
in January 2014.
Normal Course Issuer Bid
In February 2011, we announced that the Toronto Stock Exchange
had 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, with the actual
number of Class B Non-Voting shares purchased under the NCIB and
the timing of such purchases to be determined by management
considering market conditions, stock prices, our cash position and
other factors.
In 2011, we purchased an aggregate 30,942,824 Class B Non-Voting
shares for an aggregate purchase price of $1,099 million. Of these
shares, 9,000,000 were purchased pursuant to private agreements
between RCI and 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 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 February 2012, 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 24, 2012 and ending February 23, 2013, and
during such one year period we may purchase on the TSX, the NYSE
and/or alternative trading systems up to the lesser of 36.8 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 $1.0 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.
Covenant Compliance
We are currently in compliance with all of the covenants under our
debt instruments, and we expect to remain in compliance with all of
these covenants during 2012. At December 31, 2011, there were no
financial leverage covenants in effect other than those pursuant to
our bank credit facility (see Note 17(j) to the 2011 Audited
Consolidated Financial Statements). Based on our most restrictive
leverage covenants, we would have had the capacity to issue up to
approximately $16.3 billion of additional long-term debt at
December 31, 2011.
2012 Cash Requirements
On a consolidated basis, we anticipate that we will generate a net
cash surplus in 2012 from cash generated from operations. We expect
that we will have sufficient capital resources to satisfy our cash
funding requirements in 2012, including the funding of dividends on
our common shares, taking into account cash from operations and
the amount available under our $2.4 billion bank credit facility. At
December 31, 2011, there were no restrictions on the flow of funds
between subsidiary companies or between RCI and any of its
subsidiaries.
In the event that we require additional funding, we believe that any
such funding requirements may be satisfied by issuing additional debt
financing, which may include the restructuring of our existing bank
credit facility or issuing public or private debt or issuing equity, all
depending on market conditions. In addition, we may refinance a
portion of existing debt subject to market conditions and other
factors. There is no assurance that this will or can be done.
Required Principal Repayments
At December 31, 2011, the required repayments on all long-term debt
in the next five years totalled $3,569 million, comprised of $nil
principal repayments due in 2012, $606 million due in 2013, $1,119
million due in 2014, $844 million due in 2015, and $1,000 million due
in 2016. The required principal repayment due in 2013 is the $356
million (U.S. $350 million) for the 6.25% Senior Notes, as well as the
maturity of the bank credit facility, against which we had borrowed
advances of $250 million at December 31, 2011. The required principal
repayments due in 2014 are the $356 million (U.S. $350 million) for
the 5.50% Senior Notes and the $763 million (U.S. $750 million) for
the 6.375% Senior Notes. The required principal repayments due in
2015 consist of $285 million (U.S. $280 million) for the 6.75% Senior
Notes and $559 million (U.S. $550 million) for the 7.50% Senior Notes.
The required principal repayments due in 2016 consist of $1,000
million for the 5.80% Senior Notes.
Coincident with the maturity of our U.S. dollar-denominated long-
term debt, certain of our Debt Derivatives also mature, the impact of
which is not included in the principal repayments noted above. (See
the section entitled “Material Obligations Under Firm Contractual
Agreements”).
Credit Ratings
The following information relating to our credit ratings is provided as
it relates to our financing costs and liquidity. Specifically, credit
ratings may affect our ability to obtain short-term and long-term
2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 49