Cogeco 2011 Annual Report Download - page 68

Consolidated financial statements COGECO CABLE INC. 2011 67
12. Long-term debt
Maturity Interest rate 2011 2010
(in thousands of dollars) % $ $
Parent Corporation
Term Revolving Facility a)
Revolving loan July 2014 4.00
(1) 110,000 –
Revolving loan — €nil (€90 million in 2010) July 2014 2.63
(2)(3) – 121,635
Senior Secured Notes b)
Series A – US$190 million October 2015 7.00
185,049 201,387
Series B October 2018 7.60 54,646 54,609
Senior Secured Debentures Series 1 c) June 2014 5.95 298,016 297,379
Senior Secured Debentures Series 2 d) November 2020 5.15 198,400 –
Senior Secured Notes Series B e) October 2011
7.73 – 174,738
Senior Unsecured Debenture f) March 2018 5.94 99,827 99,806
Subsidiaries
Obligations under capital leases October 2013 6.71 – 9.93 2,939 5,429
948,877 954,983
Less current portion 2,094 2,296
946,783 952,687
(1) Interest rate on debt at August 31, 2011, including the applicable margin.
(2) Interest rate on debt at August 31, 2010, including the applicable margin.
(3) On January 21, 2009, the Corporation entered into a swap agreement with a financial institution to fix the floating benchmark interest rate with respect to a
portion of Euro-denominated loans outstanding under the Term Revolving Facility, and previously the Term Facility, for a notional amount of €111.5 million
which has been reduced to €95.8 million on July 28, 2009 and to €69.6 million on July 28, 2010. The interest swap rate to hedge the Euro-denominated loans
has been fixed at 2.08% until the settlement of the swap agreement on June 28, 2011.
a) The Corporation benefits from a $750 million Term Revolving Facility with a group of financial institutions led by two large Canadian
banks, which became effective on July 12, 2010. This 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, 2011, the Corporation was in
compliance with all of its covenants.
b) On October 1, 2008, the Corporation issued US$190 million Senior Secured Notes Series A maturing October 1, 2015, and $55 million
Senior Secured Notes Series B maturing October 1, 2018, net of transaction costs of $2.1 million, for net proceeds of $255 million. The
Senior Secured Notes Series B bear interest at the coupon rate of 7.60% per annum, payable semi-annually. The Corporation has entered
into cross-currency swap agreements to fix the liability for interest and principal payments on the Senior Secured Notes Series A in the
amount of US$190 million, which bear interest at the coupon rate of 7.00% per annum, payable semi-annually. Taking into account these
agreements, the effective interest rate on the Senior Secured Notes Series A is 7.24% and the exchange rate applicable to the principal
portion of the US dollar-denominated debt has been fixed at $1.0625. 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 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 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.
c) On June 9, 2009, the Corporation completed, pursuant to a public debt offering, the issue of $300 million Senior Secured Debentures
Series 1, net of discounts and transactions costs of $3.3 million, for net proceeds of $296.7 million. 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 0.875%.
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.