Cogeco 2007 Annual Report Download - page 61

Notes to Consolidated Financial Statements COGECO CABLE INC. 2007 59
11) LONG-TERM DEBT (continued)
a) On July 28, 2006, the Term Facility and the operating line of credit of the Corporation were restructured by an amended
and restated credit agreement for credit facilities totalling $900,000,000. The Term Facility is composed of four tranches:
a fi rst tranche, a revolving loan for an amount of $700,000,000 available in Canadian, U.S. or Euro currencies; a second
tranche, a swingline of $25,000,000 available in Canadian or U.S. currencies; a third tranche of $150,000,000, fully drawn,
available in Canadian currency, and a fourth tranche of ¤17,358,700 fully drawn. On August 14, 2007, the Term Facility
was amended to permit EURIBOR loans under the third tranche Term commitment in an amount not exceeding $150,000,000
subject to reduction mentionned below. The Term Facility is repayable on July 28, 2011, except for the third tranche of
$150,000,000, which is repayable as follows: $15,000,000 on July 28, 2008, $22,500,000 on July 28, 2009, $37,500,000
on July 28, 2010 and the balance on July 28, 2011. Earlier repayments can be made without penalty. The Term Facility
requires commitment fees, and interest rates are based on bankers’ acceptance, LIBOR, EURIBOR, bank prime rate loan or
U.S. base rate loan plus stamping fees. The Term Facility is secured by a fi rst fi xed and fl oating charge on the assets of the
Corporation and certain of its subsidiaries, except for permitted encumbrances, including purchased money obligations,
existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary, subject
to a maximum amount. The provisions under these facilities provide for restrictions on the operations and activities of the
Corporation. Generally, the most signifi cant restrictions relate to permitted investments and dividends on multiple and
subordinate voting shares, as well as incurrence and maintenance of certain fi nancial ratios primarily linked to the operating
income before amortization, fi nancial expense and total indebtedness.
b)
The Senior Secured Debentures Series 1 are redeemable at the Corporation’s option, in whole or in part, at the greater of par
value or the Canada bond yield plus 0.3%. These debentures mature on June 4, 2009 and bear interest at 6.75% per annum,
payable semi-annually. These debentures are indirectly secured by a fi rst fi xed and fl oating charge and a security interest
on all assets of the Corporation and certain of its subsidiaries.
c) The Senior Secured Notes are senior secured obligations and rank equally and rateably with all existing and future senior
indebtedness. These notes are indirectly secured by a fi rst fi xed and fl oating charge and a security interest on all assets of
the Corporation and certain of its subsidiaries. The notes are redeemable at the Corporation’s option at any time, in whole
or in part, prior to maturity, at 100% of the principal amount plus a make-whole premium. The Series A mature on October 31,
2008 and the Series B mature on October 31, 2011. The Senior Secured Notes Series B have an interest coupon rate of 7.73%
per annum, payable semi-annually. On November 1, 2001, the Corporation entered into cross-currency swap agreements to
fi x the liability for interest and principal payments on US$150,000,000 of its Senior Notes Series A, which have an interest
coupon rate of 6.83% per annum, payable semi-annually. These agreements have resulted in an effective interest rate of
7.254% on the Canadian dollar equivalent of the US debt. The exchange rate applicable to the principal portion of the debt
has been fi xed at CAN$1.5910.
d) On February 2, 2007, the Corporation gave a notice of redemption to purchase on March 5, 2007, all of its 8.44% Second
Secured Debentures Series A (the “Notes”) in the aggregate principal amount of $125,000,000. Concurrently, the Corporation
also made an offer to purchase for cancellation on February 12, 2007, all of the validly issued and held Notes upon receipt
by the Trustee of a written notice of acceptance by the holders of Notes. As a result, a total of $89,257,000 of Notes were
redeemed on February 12, 2007, for a total cash consideration of $91,038,000. The remaining Notes of $35,743,000
were redeemed on March 5, 2007, for a total cash consideration of $36,550,000. The excess of the redemption price over
the aggregate principal amount was recorded as fi nancial expense. These debentures were secured by second fi xed charges
on certain assets and fl oating charges on all assets of the Corporation and certain of its subsidiaries.
e) The deferred credit represents the amount that would have been payable at August 31, 2007 and 2006 under cross-
currency swaps entered into by the Corporation to hedge Senior Secured Notes Series A denominated in U.S. dollars
(note 11 c)).