Cogeco 2007 Annual Report Download - page 71

Notes to Consolidated Financial Statements COGECO CABLE INC. 2007 69
17) COMMITMENTS AND CONTINGENCIES
COMMITMENTS
As at August 31, 2007, the Corporation and its subsidiaries are committed under lease agreements and other long-term
contracts to make annual payments as follows:
2013 AND
2008 2009 2010 2011 2012 THEREAFTER
(amounts are in thousands of dollars) $ $ $ $ $ $
LEASE AGREEMENTS 11,327 11,448 10,910 10,723 10,165 18,441
OTHER LONG-TERM CONTRACTS 8,508 7,101 2,308 — — —
19,835 18,549 13,218 10,723 10,165 18,441
CONTINGENCIES
The Corporation and its subsidiaries are involved in matters involving litigation arising out of the ordinary course and
conduct of its business. Although such matters cannot be predicted with certainty, management does not consider the
Corporation’s exposure to litigation to be signifi cant to these fi nancial statements.
DISCLOSURE OF GUARANTEES
In the normal course of business, the Corporation enters into agreements containing features that meet the criteria for a
guarantee including the following:
Taxes for Municipal Rights of Way
During the second quarter, the Corporation has guaranteed the payment by Cabovisão of certain taxes for municipal rights
of way assessed by the Municipality of Seixal in Portugal for the years 2004 and 2005 totalling ¤5.7 million (the “Tax
Amounts”), which are currently being challenged by Cabovisão. Trustworthy fi nancial guarantees were required under
applicable Portuguese law in order for Cabovisão to challenge the Tax Amounts and withhold payment thereof until a fi nal
judgement no longer subject to appeal is rendered by the Portuguese courts having jurisdiction in this matter. As a result,
the Corporation may be required to pay, upon written demand by the Municipality of Seixal, the required amounts following
fi nal judgement up to a maximum aggregate amount of ¤5.7 million ($8.3 million), should Cabovisão fail to pay such
required amounts.
Business Acquisition and Assets Disposal
In connection with the acquisition of business or sale of assets, in addition to possible indemnifi cation relating to failure
to perform covenants and breach of representations and warranties, the Corporation has agreed to indemnify the seller or
the purchaser against claims related to events that occurred prior to the date of acquisition or sale. The term and amount
of such indemnifi cation will sometimes be limited by the agreement. The nature of these indemnifi cation agreements
prevents the Corporation from estimating the maximum potential liability required to be paid to guaranteed parties. In
management’s opinion, the likelihood that a signifi cant liability will be incurred under these obligations is low. The Corporation
has purchased directors’ and offi cers’ liability insurance with a deductible per loss. As at August 31, 2007 and 2006, no
liability has been recorded associated with these indemnifi cations.
Long-Term Debt
Under the terms of the Term Facility, the Senior Secured Notes and the Second Secured Debentures Series A, the Corporation
has agreed to indemnify the other parties against changes in regulations relative to withholding taxes and costs incurred by
the lenders due to changes in laws. These indemnifi cations extend for the term of the related fi nancings and do not provide
any limit on the maximum potential liability. The nature of the indemnifi cation agreement prevents the Corporation from
estimating the maximum potential liability it could be required to pay. As at August 31, 2007 and 2006, no liability has
been recorded associated with these indemnifi cations.