Cogeco 2007 Annual Report Download - page 27

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Management’s Discussion and Analysis COGECO CABLE INC. 2007 25
INVESTING ACTIVITIES
ACQUISITION OF CABOVISÃO—TELEVISÃO POR CABO, S.A.
On June 2, 2006, the Corporation entered into an agreement with Cable Satisfaction International Inc. (“CSII”), Catalyst
Fund Limited Partnership I and Cabovisão, to purchase, for a total consideration of ¤461.8 million ($667.5 million), all the
shares of the second largest cable telecommunications company in Portugal, an indirect wholly-owned subsidiary of CSII.
The price includes the purchase of senior debt and reimbursement of certain other Cabovisão liabilities. The acquisition
was completed on August 1, 2006. The fi nal purchase price has been determined following completion of a post-closing
working capital adjustment that occurred on March 9, 2007. According to the agreement, the fi nal purchase price was
reduced by an amount of ¤2.2 million ($3.4 million). The acquisition was accounted for using the purchase method. The
results of Cabovisão have been consolidated as of the acquisition date.
Management has completed its valuations of tangible and intangible assets acquired and liabilities assumed and the fi nal
allocation is as follows:
(amounts are in thousands of dollars) $
CONSIDERATION PAID
PURCHASE OF SHARES 304,188
WORKING CAPITAL ADJUSTMENT (3,371)
SECURED LENDERS DEBT AND CERTAIN SPECIFIED CABOVISÃO LIABILITIES 274,761
ACQUISITION COSTS 6,299
581,877
NET ASSETS ACQUIRED
CASH AND CASH EQUIVALENTS 5,711
RESTRICTED CASH 489
ACCOUNTS RECEIVABLE 16,570
PREPAID EXPENSES 1,324
FIXED ASSETS 323,796
CUSTOMER RELATIONSHIPS 71,684
GOODWILL 344,004
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ASSUMED (60,433)
OTHER SPECIFIED CABOVISÃO LIABILITIES ASSUMED (91,914)
FUTURE INCOME TAX LIABILITIES (29,354)
581,877
The fi nal allocation resulted in an increase in fi xed assets of $36,144,000, an increase in customer relationships of
$71,684,000 and an increase in future income tax liabilities of $29,354,000, as well as a decrease in accounts payable
and accrued liabilities assumed of $4,849,000. The net impact of these adjustments combined with the reduction of the
purchase price reduced goodwill by $87,020,000 (see note 9 b) of the consolidated fi nancial statements of the Corporation
on page 57).
In order to fi nance the cash component of the transaction, the Term Facility and the operating line of credit of the Corporation
were restructured by an amended and restated credit agreement (see note 11 a) of the consolidated fi nancial statements
of the Corporation on page 59).