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MANAGEMENT’S DISCUSSION AND ANALYSIS
On October 2, 2013, we issued US$1.5 billion of senior notes for total
net proceeds of approximately Cdn$1,528 million (US$1,481 million),
after deducting the original issue discount and debt issuance costs, with
proceeds used for general corporate purposes. The notes issued
consisted of the following:
• US$850 million of 4.1%senior notes due in 2023 (the October 2023
Notes)
• US$650 million of 5.45%senior notes due in 2043 (the October
2043 Notes).
In June 2012, we issued Cdn$1.1 billion senior notes for total net
proceeds of approximately Cdn$1,091 million, after deducting the
original issue discount and debt issuance costs, with the proceeds used
to repay outstanding advances under our bank credit facility and for
general corporate purposes. The notes issued consisted of the
following:
• Cdn$500 million of 3.0%senior notes due 2017 (the June 2017
Notes)
• Cdn$600 million of 4.0%senior notes due 2022 (the June 2022
Notes).
Each of the notes issued in 2013 and 2012 are guaranteed by Rogers
Communications Partnership and rank equally with all of our other
senior unsecured notes and debentures, bank credit and letter of credit
facilities. At December 31, 2013, 100%of the foreign exchange risk on
our US$ denominated senior notes and debentures was hedged against
fluctuations in foreign exchange and interest rates. See “Managing
foreign currency, interest rates and equity compensation” as described
below for information about our hedging transactions.
Debt Payments and Related Derivative Settlements
In June 2013, we repaid and bought the entire outstanding principal
amount of our US$350 million ($356 million) 6.25%senior notes.
Concurrent with this repayment, the associated Debt Derivatives were
also settled at maturity, resulting in an aggregate net payment on
settlement of approximately $104 million.
In September 2013, we paid Cdn$263 million to terminate US$1,075
million ($1,360 million) aggregate notional amount of Debt Derivatives
and entered into new Debt Derivatives with a notional amount of
US$1,075 million ($1,110 million) under the same terms, but at the
lower prevailing foreign exchange rate. See “Financial Risk
Management” for further details.
Weighted Average Cost of Debt
Our weighted average cost of debt, including short-term borrowings
was 5.5%with weighted average term to maturity of 11.3 years at
December 31, 2013, compared to 6.1%with a weighted average term
to maturity of 9.2 years at December 31, 2012. This lower average rate
and longer term to maturity primarily reflects the US $2.5 billion of ten
and thirty year notes, issued in 2013 at some of the lowest coupon
rates ever achieved for Rogers corporate debt, combined with the
establishment of our securitization program and the maturity of our
6.25%senior notes due 2013.
(%)
WEIGHTED AVERAGE COST OF LONG-TERM DEBT
2013
2012
2011
5.5%
6.1%
6.2%
Debt Tender Offer
On January 29, 2014, we announced that one of our wholly-owned
subsidiaries had commenced cash tender offers for any and all of our
US $750 million 6.375%senior notes due 2014 and our US $350
million 5.500%senior notes due 2014. The tender offer consideration
will be US$1,000 for each $1,000 principal amount of notes (plus
accrued and unpaid interest to, but not including, the settlement date)
and a consent payment equal to US$2.50 per US$1,000 principal
amount of notes.
RATIO OF DEBT TO ADJUSTED OPERATING PROFIT
2013
2012
2011
2.4x
2.3x
2.2x
Accounts Receivable Securitization
We received funding of $650 million under our accounts receivable
securitization program during 2013. We have committed funding under
the program up to a maximum of $900 million. We continue to service
and retain substantially all of the risks and rewards relating to the
accounts receivable we sold, and therefore, the receivables remain
recognized on our statement of financial position and the funding
received is recorded as short-term borrowings on our statement of
financial position.
The buyer’s interest in these secured trade receivables ranks ahead of
our interest. The buyer of our trade receivables has no claim on any of
our other assets. The terms of our accounts receivable securitization
program are committed by the participating financial institution until
expiry on December 31, 2015.
2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 59