Cogeco 2012 Annual Report Download - page 91

90 COGECO CABLE INC. 2012 Investor information
INVESTOR INFORMATION
CONSOLIDATED CAPITALIZATION
A
t August 31, 2012 2011 2010
(
1
)
(in thousands of dollars) $ $ $
Indebtedness(2) 1,069,112 981,214 958,939
Shareholders’ equity 1,188,431 1,033,252 1,136,301
Total 2,257,543 2,014,466 2,095,240
(1) The numbers relating to fiscal year 2010 have not been restated to comply with the adoption of IFRS since the transition date for the Corporation is
September 1, 2010.
(2) Indebtedness is defined as the total of bank indebtedness, principal on long-term debt, balance due on a business acquisition and obligations under derivative
financial instruments.
CREDIT RATINGS
On August 21, 2012, Dominion Bond Rating Service (“DBRS”) confirmed their rating on the Senior Secured Debentures and Notes to “BBB
(low)” and assigned an Issuer Rating of BB (high). The “BBB (low)” rating is one notch above the Issuer ratings of “BB (high)” and reflects very
high recovery prospects of first lien secured issues. Obligations rated in the “BBB” category are in the fourth highest category and are regarded
as of adequate credit quality, where the degree of protection afforded interest and principal is considered acceptable, but the entity is fairly
susceptible to adverse changes in financial and economic conditions, or there may be other adverse conditions present which reduce the
strength of the entity and its rated securities. DBRS has assigned a recovery rating of “RR1” to Cogeco Cable’s Senior Secured Debentures
and Notes reflecting the likelihood that holders would recover 100% of principal in the event of payment default.
On July 19, 2012, Standard & Poor’s Ratings Services (“S&P”) confirmed their rating on the Senior Secured Debentures and Notes of the
Corporation to “BBB”. The “BBB” rating is two notches above the corporate credit ratings of “BB+” and reflects very high recovery prospects of
first lien secured issues. Obligations rated in the “BBB” category are in the fourth highest category and are regarded as investment-grade. Such
obligations show adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the obligation. The ratings may be modified by the addition of a plus
“(+)” or minus “(–)” sign to show relative standing within the major rating categories. S&P has assigned a recovery rating of “1” to Cogeco
Cable’s credit facility and other senior secured first-priority debt. The “1” recovery rating indicates expectations of very high recovery (90%-
100%) of principal in the event of payment default.
On July 18, 2012, following the announcement of the Atlantic Broadband acquisition, Fitch Ratings (“Fitch”) has placed under Rating Watch
Negative the Issuer Default Rating (IDR) of Cogeco Cable at “BBB-” and their rating on the Senior Secured Debentures and Notes at “BBB-”.
The rating action reflects Fitch’s need to assess the effect of the acquisition transaction on Cogeco Cable’s credit profile. Fitch believes,
pending final review of the transaction once it closes, that a downgrade, if necessary would be limited to one notch. Obligations rated in the
“BBB” category are regarded as of good credit quality, where the capacity for payment of financial commitments is considered adequate but
adverse changes in circumstances and economic conditions are more likely to impair this capacity.
The table below shows Cogeco Cable’s credit ratings:
A
s at August 31, 2012 DBRS Fitch S&P
Senior secured notes and debentures BBB (low) BBB– BBB
A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating
organization.