Telus 2011 Annual Report Download - page 159

TELUS 2011 ANNUAL REPORT . 155
FINANCIAL STATEMENTS & NOTES: 20
Principal face amount Redemption
Outstanding present
Originally at financial value spread
Series Issued Maturity Issue price issued statement date (basis points)(1)
5.00% Notes, Series CB May 2006 June 2013 $998.80 $300 million $300 million 16
4.50% Notes, Series CC March 2007 March 2012 $999.91 $300 million $300 million 15
4.95% Notes, Series CD March 2007 March 2017 $999.53 $700 million $700 million 24
5.95% Notes, Series CE(2) April 2008 April 2015 $998.97 $500 million $500 million 66
4.95% Notes, Series CF(2) May 2009 May 2014 $999.96 $700 million $700 million 71
5.05% Notes, Series CG(2) December 2009 December 2019 $994.19 $1.0 billion $1.0 billion 45.5
5.05% Notes, Series CH(2) July 2010 July 2020 $997.44 $1.0 billion $1.0 billion 47
3.65% Notes, Series CI(2) May 2011 May 2016 $996.29 $600 million $600 million 29.5
(1)
The notes are redeemable at the option of the Company, in whole at any time, or in part from time to time, on not fewer than 30 and not more than 60 days’ prior notice. The redemption
price is equal to the greater of (i) the present value of the notes discounted at the Government of Canada yield plus the redemption present value spread, or (ii) 100% of the principal
amount thereof. In addition, accrued and unpaid interest, if any, will be paid to the date fixed for redemption.
(2) This series of notes requires the Company to make an offer to repurchase the series of notes at a price equal to 101% of their principal plus accrued and unpaid interest to the date
of repurchase upon the occurrence of a change in control triggering event, as defined in the supplemental trust indenture.
On July 27, 2010, the Company exercised its right to early and
partially redeem, on September 2, 2010, U.S.$607 million of its publicly
held 2011 (U.S. Dollar) Notes. The loss on redemption, which included
the loss arising on early settlement of the associated cross currency
interest rate swap agreements, was $52 million.
On December 1, 2009, the Company exercised its right to early and
partially redeem, on December 31, 2009, U.S.$577 million of its publicly
held 2011 (U.S. Dollar) Notes. The loss on redemption, which included
the loss arising on early settlement of the associated cross currency
interest rate swap agreements, was $99 million.
2011 Cross Currency Interest Rate Swap Agreements
With respect to the 2011 (U.S. Dollar) Notes, U.S.$NIL (December 31,
2010 – U.S.$0.7 billion; January 1, 2010 – U.S.$1.3 billion) in aggregate,
the Company entered into cross currency interest rate swap agreements
which effectively converted the principal repayments and interest obli-
gations to Canadian dollar obligations with an effective fixed interest rate
of 8.493% and an effective fixed economic exchange rate of $1.5327.
The counterparties of the swap agreements were highly rated finan cial
institutions and the Company did not anticipate any non-performance.
TELUS did not require collateral or other security from the counterparties
due to its assessment of their creditworthiness.
The Company translates items such as the U.S. Dollar Notes into
equivalent Canadian dollars at the rate of exchange in effect at the state-
ment of financial position date. The swap agreements at December 31,
2011, comprised a net derivative liability of $NIL (December 31, 2010 –
$404 million; January 1, 2010 – $721 million), as set out in Note 4(h).
The asset value of the swap agreements increased (decreased) when the
statement of financial position date exchange rate increased (decreased)
the Canadian dollar equivalent of the U.S. Dollar Notes.
(c) TELUS Corporation commercial paper
On May 15, 2007, TELUS Corporation entered into an unsecured
commer cial paper program, which is backstopped by a portion of its
$2.0 billion syndicated credit facility, enabling it to issue commercial
paper up to a maximum aggregate of $800 million (or U.S. dollar
equivalent), to be used for general corporate purposes, including capital
expenditures and investments; in August 2008, the program was
expanded to $1.2 billion. Commercial paper debt is due within one year
and is classified as a current portion of long-term debt as the amounts
are fully supported, and the Company expects that they will continue
to be supported, by the revolving credit facility, which has no repayment
requirements within the next year.
(d) TELUS Corporation credit facility
On November 3, 2011, TELUS Corporation entered into a $2.0 billion
bank credit facility with a syndicate of financial institutions. The credit
facility consists of a $2.0 billion (or U.S. dollar equivalent) revolving credit
facility expiring on November 3, 2016, to be used for general corporate
purposes including the backstop of commercial paper. This new facility
replaced the Company’s pre-existing committed credit facility prior to its
expiry in May 2012.
TELUS Corporation’s credit facility expiring on November 3, 2016,
is unsecured and bears interest at prime rate, U.S. Dollar Base Rate,
a bankers’ acceptance rate or London interbank offered rate (LIBOR)
(all such terms as used or defined in the credit facility), plus applicable
margins. The credit facility contains customary representations, warran-
ties and covenants, including two financial quarter-end financial ratio
tests. The financial ratio tests are that the Company may not permit its
net debt to operating cash flow ratio to exceed 4.0:1 and may not permit
its operating cash flow to interest expense ratio to be less than 2.0:1,
each as defined under the credit facility.
On June 19, 2009, TELUS Corporation entered into an amended
$300 million revolving credit facility with a syndicate of financial institutions,
expiring December 31, 2010; during the quarter ended September 30,
2010, the Company exercised its right to cancel the facility in its entirety.
The credit facility was unsecured and bore interest at prime rate or
bankers’ acceptance rate (all such terms as used or defined in the credit
facility), plus applicable margins.
Continued access to TELUS Corporation’s credit facility is not contingent on the maintenance by TELUS Corporation of a specific credit rating.
As at (millions) Dec. 31, 2011 Dec. 31, 2010 January 1, 2010
Revolving credit facility expiring Nov. 3, 2016 May 1, 2012 May 1, 2012 Dec. 31, 2010 Total
Net available $ß1,234 $ß1,779 $ß1,410 $ß300 $ß1,710
Outstanding, undrawn letters of credit – 117 123 – 123
Backstop of commercial paper 766 104 467 – 467
Gross available $ß2,000 $ß2,000 $ß2,000 $ß300 $ß2,300