Cogeco 2010 Annual Report Download - page 30

Management’s Discussion and Analysis (MD&A) COGECO CABLE INC. 2010 29
financial expense coverage ratio should decrease as a result of the rise in the average cost of Indebtedness described above. See “Fiscal 2011
financial guidelines” section on page 39 for further details.
Outstanding share data
A description of Cogeco Cable’s share data as at September 30, 2010 is presented in the table below. Additional details are provided in note 14
of the consolidated financial statements on page 62.
Number o
f
shares/options
Amount
(in thousands
of dollars)
Common shares
Multiple voting shares 15,691,100 98,346
Subordinate voting shares 32,885,971 892,355
Options to purchase subordinate voting shares
Outstanding options 713,863
Exercisable options 507,177
During fiscal 2010 and 2009 respectively, 66,174 and 153,381 stock options were granted. On April 6, 2009, the Corporation cancelled 206,180
options which had been conditionally granted in relation with the acquisition of Cabovisão, at a price of $26.63 per share, subject to
performance criteria of Cabovisão being met. Of these options, 93,518 were exercisable. The Corporation recorded compensation expense for
options granted on or after September 1, 2003.
Financing
The Corporation benefits from a new $750 million Term Revolving Facility with a group of financial institutions led by two large Canadian banks,
which became effective on July 12, 2010, and replaced the Corporation’s $862.5 million Term Facility coming to maturity on July 28, 2011. This
new Term Revolving Facility has an option to be increased up to $1 billion subject to lenders’ participation. The Term Revolving Facility is
available in Canadian, US or Euro currencies and includes a swingline of $25 million available in Canadian or US currencies. The Term
Revolving Facility may be extended by additional one-year periods on an annual basis, subject to lenders’ approval, and, if not extended,
matures four years after its issuance or the last extension, as the case may be. The Term Revolving Facility can be repaid at any time without
penalty. The Term Revolving Facility requires commitment fees, and interest rates are based on bankers’ acceptance, LIBOR in Euros or in US
dollars, bank prime rate loan or US base rate loan plus the applicable margin. The Term Revolving Facility is indirectly secured by a first priority
fixed and floating charge on substantially all present and future real and personal property and undertaking of every nature and kind 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 this facility provides 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 operating income before amortization, financial expense and total Indebtedness. At August 31, 2010,
the Corporation was in compliance with all of its covenants and had used $129.6 million of its $750 million Term Revolving Facility for a
remaining availability of $620.4 million.
The Term Facility of a remaining amount of $862.5 million was fully repaid on July 12, 2010 and was 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 a remaining amount of $112.5 million, fully drawn, available in Canadian currency,
and a fourth tranche of €17.4 million, fully drawn. The Term Facility was repayable on July 28, 2011, except for the third tranche of
€104.6 million; €15.7 million of which was repaid on July 28, 2009 in addition to a repayment of €10.5 million on July 28, 2008; the remainder of
which was repayable as follows: €26.1 million on July 28, 2010 and the balance on July 28, 2011. Earlier repayments could have been made
without penalty. The Term Facility required commitment fees, and interest rates were based on bankers’ acceptance, LIBOR, EURIBOR, bank
prime rate loan or US base rate loan plus the applicable margin. The Term Facility was indirectly secured by a first priority fixed and floating
charge on substantially all present and future real and personal property and undertaking of every nature and kind of the Corporation and
certain of its subsidiaries, and provided 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 provided for restrictions on the operations and activities of the Corporation. Generally, the most significant restrictions were
related 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.
On June 9, 2009, the Corporation completed, pursuant to a public debt offering, the issue of $300 million Senior Secured Debentures Series 1.
These debentures mature on June 9, 2014 and bear interest at 5.95% per annum, payable semi-annually. These debentures are indirectly
secured by a first priority fixed and floating charge and a security interest on substantially all present and future real and personal property and
undertaking of every nature and kind of the Corporation and certain of its subsidiaries. The net proceeds of sale of the debentures were used to
reimburse Cogeco Cable’s existing Indebtedness and for general corporate purposes.