Cogeco 2008 Annual Report Download - page 28

Management’s Discussion and Analysis COGECO CABLE INC. 2008 27
OUTSTANDING SHARE DATA
A description of Cogeco Cable’s share data as at September 30, 2008 is presented in the table below. Additional details are
provided in note 13 on page 60.
AMOUNT
NUMBER OF SHARES/ (in thousands
OPTIONS of dollars)
COMMON SHARES
MULTIPLE VOTING SHARES 15,691,100 98,346
SUBORDINATE VOTING SHARES 32,832,828 890,742
OPTIONS TO PURCHASE SUBORDINATE VOTING SHARES
OUTSTANDING OPTIONS 832,295
EXERCISABLE OPTIONS 314,334
During fiscal 2008 and 2007 respectively, 113,084 and 577,587 stock options were granted, including 376,000 conditional stock
options in 2007. The Corporation recorded compensation expense for options granted on or after September 1, 2003.
During fiscal 2007, the Corporation completed two public offerings totalling 8,000,000 subordinate voting shares for gross proceeds
of $346 million. The offerings resulted in net proceeds to Cogeco Cable of approximately $331.1 million, which were used to reduce
long-term debt and the working capital deficiency. See the “Cash Flow Analysis” section on page 21 for further details.
With regards to the acquisition of Cabovisão in 2007, the Corporation granted 376,000 conditional stock options with an exercise
price of $26.63. These options vest over a period of three years beginning one year after the day such options are granted and are
exercisable over ten years. The vesting of these options is conditional to the achievement of certain yearly financial objectives by
the Portuguese subsidiary over a period of three years.
FINANCING
On July 28, 2008, the Corporation repaid €10.5 million, representing 10% of the amount drawn, on the third tranche of its
$900 million Term Facility, which was reduced to $885 million accordingly.
The Corporation benefits from an $885 million credit facility in the form of a Term Facility and an operating line of credit with a group
of financial institutions. The Term Facility is composed of four tranches: a first tranche, a revolving loan for an amount of
$700 million available in Canadian, US or Euro currencies; a second tranche, a swingline of $25 million available in Canadian or US
currencies; a third tranche of $150 million, fully drawn, available in Canadian currency, and a fourth tranche of €17.4 million fully
drawn. On August 14, 2007, the Term Facility was amended to permit EURIBOR loans under the third tranche in an amount not
exceeding the equivalent of $150 million subject to reductions as mentioned below. On August 22, 2007, the third tranche of the
Term Facility of $150 million was drawn in Euros. The amount drawn in Euros of €104.6 million was established at the prevailing
exchange rate at that date. In accordance with the amended credit agreement, the amount available under the first tranche of
$700 million can be temporarily reduced in the event of an increase in the exchange rate affecting the amount drawn under the third
and fourth tranches. The Term Facility is repayable on July 28, 2011, except for the third tranche of €104.6 million; €10.5 million of
which was repaid on July 28, 2008; the remainder of which is repayable as follows: €15.7 million on July 28, 2009, €26.1 million 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 US base rate
loan plus stamping fees. The Term Facility is secured by a first fixed and floating charge on the assets of the Corporation and
certain of its subsidiaries, and provides for certain 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
significant restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as well as
incurrence and maintenance of certain financial ratios primarily linked to the operating income before amortization, financial expense
and total Indebtedness. As at August 31, 2008, the Corporation was in compliance with all of its covenants and had used
$467.6 million of its $885 million Term Facility for a remaining availability of $417.4 million.
On March 5, 2008, the Corporation issued a $100 million Senior Unsecured Debenture by way of private placement. As previously
discussed, the proceeds of this issuance were primarily used to finance the recent acquisitions.