Shaw 2014 Annual Report Download - page 58

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
notes, pay common share dividends of $339 million, fund $240 million of accelerated capital
spend, pay $45 million of restructuring costs, make $52 million in financial investments and
increase cash balances $215 million.
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 May 13, 2013. The shelf
prospectus allows for the issue up to an aggregate $4 billion of debt and equity securities over a
25 month period. Pursuant to the shelf prospectus, on January 31, 2014 the Company issued
$500 million senior notes at a rate of 4.35% due January 31, 2024 and $300 million floating
rate senior notes due February 1, 2016. The floating rate senior notes bear interest at an
annual rate equal to three month CDOR plus 0.69%. The net proceeds from the issuances were
used to redeem the $600 million senior notes due June 2, 2014 and for working capital and
general corporate purposes.
On December 5, 2013 Shaw received the approval of the TSX to renew its normal course issuer
bid to purchase its Class B Non-Voting Shares for a further one year period. The Company is
authorized to acquire up to 20,000,000 Class B Non-Voting Shares during the period from
December 9, 2013 to December 8, 2014. No shares have been repurchased during the current
year.
The Company’s DRIP allows holders of Class A Shares and Class B Non-Voting Shares who are
residents of Canada to automatically reinvest monthly cash dividends to acquire additional
Class B Non-Voting Shares. Class B Non-Voting Shares distributed under the Company’s DRIP
are new shares issued from treasury at a 2% discount from the 5 day weighted average market
price immediately preceding the applicable dividend payment date. The DRIP has resulted in
cash savings and incremental Class B Non-Voting Shares of $146 million during fiscal 2014.
Subsequent to year end, the Company used a combination of cash on hand, assumption of
ViaWest debt and US $330 million of credit facility borrowings to finance the acquisition of
ViaWest.
Based on available credit facilities and forecasted free cash flow, the Company expects to have
sufficient liquidity to fund operations and obligations during the upcoming fiscal year. On a
longer-term basis, Shaw expects to generate free cash flow and have borrowing capacity
sufficient to finance foreseeable future business plans and refinance maturing debt.
Debt structure and financial policy
Shaw structures its borrowings generally on a stand-alone basis. The borrowings of Shaw are
unsecured. While certain non-wholly owned subsidiaries are subject to contractual restrictions
which may prevent the transfer of funds to Shaw, there are no similar restrictions with respect
to wholly-owned subsidiaries of the Company.
Shaw’s borrowings are subject to covenants which include maintaining minimum or maximum
financial ratios. At August 31, 2014, Shaw is in compliance with these covenants and based on
current business plans, the Company is not aware of any condition or event that would give rise
to non-compliance with the covenants over the life of the borrowings. As at August 31, 2014,
the ratio of debt to operating income before restructuring costs and amortization for the
Corporation is 1.9 times.
Having regard to prevailing competitive, operational and capital market conditions, the Board of
Directors has determined that having this ratio in the range of 2.0 to 2.5 times would be
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