Cogeco 2002 Annual Report Download - page 16

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Cogeco Cable Inc.
Capital Structure
As at August 31, 2002, shareholders’ equity amounted to
$716.8 million, compared to $712.9 million a year ago. As
at August 31, 2002, the Corporation’s total indebtedness,
net of cash and cash equivalents (« Net Indebtedness »),
was $829.6 million, compared to $802.2 million at the
same date last year. The increase in Net Indebtedness is
mainly attributable to the sum of capital expenditures
and deferred charges exceeding Cash Flow. As at
August 31, 2002, the weighted average interest rate on
the fixed rate portion was 7.5%, which was higher than
the 7.2% at the same date last year due to the higher
average interest rate on Senior Secured Notes issued on
November 1, 2001. The following table summarizes debt-
related financial ratios over the last two fiscal years.
It is the Corporation’s intention to maintain a conservative
capital structure, in order to safeguard its investment-
grade credit rating. This rating allows quick access to the
public debt market at favorable interest rates in order to
finance internal and external growth opportunities.
The Corporation benefits from a $400 million Term Facility
and a $25 million operating line of credit with a number
of financial institutions. These bank facilities are not guar-
anteed by the parent company COGECO Inc. As a t
August 31, 2002, the Corporation had utilized $129 million of
its Term Facility. Cogeco Cable is on schedule with finan-
cial expense payments, principal repayments on its
b o r rowing, and continues to satisfy the various conditions
stipulated in its financing agreements.
Of all Cogeco Cable’s debt instruments, the bank facilities
set the most restrictive limitations on the Corporation’s
activities and operations. The most important re s t r i c t i o n s
c o n c e rn the maintenance of certain financial ratios,
authorized investments, disposal of assets, re i m b u r s e m e n t
of long-term debt and distributions to share h o l d e r s .
Capital Structure
August 31, 2002 2001
Fixed rate debt( 1 ) 8 4 % 6 1 %
Average term : long-term debt 6.4 ye a rs 4.9 years
Net indebtedness/S h a reholders’ equity 1 . 2 1 . 1
Net indebtedness/Operating income
b e f o r e depreciation and amortization( 2 ) 4 . 9 5 . 0
Operating income before depreciation
and amortization/Financial expense( 2 ) 2 . 8 3 . 0
( 1 ) The interest rate is fixed through financial instruments
and long-term loans.
( 2 ) Operating income before depreciation and amortization is
a decisive indicator of the Corporation’s capacity to finance its
ongoing operations on the one hand, and service its debt on the other.
Net Indebtedness to Operating Income
before Depreciation and Amortization
Interest Coverage
Leverage and Interest
Coverage Ratio
(ratios)
6.0
5.0
4.0
3.0
2.0
1.0
9 8 9 9 0 0 0 1 0 2