Shaw 2011 Annual Report Download - page 70

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
Within thirty days of closing of the Media acquisition, a subsidiary of CW Media was required to
make a change of control offer at a cash price equal to 101% of the obligations under the US
13.5% senior unsecured notes due 2015 issued by it in accordance with a related indenture
dated as of July 3, 2008. As a result, on November 15, 2010, an offer was made to purchase
all of the notes for an effective purchase price of US $1,145.58 for each US $1,000 face
amount. An aggregate of US $51.6 million face amount was tendered under the offer and
purchased by the Company for cancellation for an aggregate price of approximately $60 million,
including accrued interest. During the fourth quarter, the Company elected to redeem the
remaining outstanding US $260.4 million face amount, having an aggregate accrued valued of
US $282.3 million, at 106.75% as set out under the terms of the indenture at an effective
purchase price of US $1,230.70 for each US $1,000 face amount.
To allow for timely access to capital markets, the Company filed a short form base shelf
prospectus with securities regulators in Canada and the U.S. on November 18, 2010. The shelf
prospectus allows for the issue of up to an aggregate $4 billion of debt and equity securities
over a 25 month period. Pursuant to this shelf prospectus, the Company issued $300.0 million
of Preferred Shares and completed three senior notes offerings totalling $1.3 billion as follows:
ŠOn May 31, 2011 the Company issued 12,000,000 Preferred Shares at a price of
$25.00 per share for aggregate gross proceeds of $300.0 million. The net proceeds were
used for working capital and general corporate purposes while excess funds are being held
in cash and cash equivalents. Holders of the Preferred Shares are entitled to receive, as
and when declared by the Company’s board of directors, a cumulative quarterly fixed
dividend yielding 4.50% annually for the initial period ending June 30, 2016. Thereafter,
the dividend rate will be reset every five years at a rate equal to the then current 5-year
Government of Canada bond yield plus 2.00%. Holders of Preferred Shares will have the
right, at their option, to convert their shares into Cumulative Redeemable Floating Rate
Preferred Shares, Series B (the “Series B Preferred Shares”), subject to certain
conditions, on June 30, 2016 and on June 30 every five years thereafter. Holders of the
Series B Preferred Shares will be entitled to receive cumulative quarterly dividends, as
and when declared by the Company’s board of directors, at a rate set quarterly equal to
the then current three-month Government of Canada Treasury Bill yield plus 2.00%.
ŠOn December 7, 2010 the Company issued $500 million senior notes at a rate of 5.5%
due December 7, 2020 and issued an additional $400 million under the reopened
6.75% senior notes due November 9, 2039. The effective rate on the $500 million
senior notes and $400 million senior notes is 5.548% and 6.963%, respectively, due to
discounts on the issuances. The net proceeds from the notes issuances were used to
repay borrowings under the Company’s $1 billion revolving credit facility. In conjunction
with the senior notes issuances, the unsecured $500 million revolving credit facility was
cancelled. No amounts had been drawn under this facility.
ŠOn February 17, 2011 the Company issued an additional $400 million under the
reopened 6.75% senior notes due November 9, 2039. The effective rate is 6.961% due
to the discount on issuance. The net proceeds were used for working capital and general
corporate purposes as well as to partially repay borrowings under the revolving credit
facility while excess funds are held in cash and cash equivalents.
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