Cogeco 2007 Annual Report Download - page 53

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Notes to Consolidated Financial Statements COGECO CABLE INC. 2007 51
2) BUSINESS ACQUISITION (continued)
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
SHARE PURCHASE PRICE 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)).
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)).
Also, in accordance with the Portuguese Companies Income Tax Code, accumulated tax losses cannot be deducted if the
ownership of at least 50% of the social capital changes from the moment when the tax losses were generated, unless a
request is fi led before such change in the ownership takes place, subject to approval by the Portuguese tax authorities. To this
effect, a request for preservation of tax losses was fi led by Cabovisão on July 28, 2006, and Cabivisão has not yet received
a reply. Consequently, these losses have not been included in the purchase price allocation, but will be recorded as a
reduction of goodwill upon realisation (see note 5).