Cogeco 2014 Annual Report Download - page 26

MD&A COGECO CABLE INC. 2014 25
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL STRUCTURE
The table below summarizes debt-related financial ratios over the last two fiscal years and the fiscal 2015 guidelines:
Years ended August 31, 2015
Guidelines 2014 2013
Average cost of indebtedness(1) 4.2% 4.3% 4.1%
Fixed rate indebtedness(2) 70% 78% 66%
Average term: long-term debt (in years) 5.6 6.2 6.4
Net secured indebtedness(3)(4) / adjusted EBITDA(5) N/A (7) 2.1 2.6
Net indebtedness(4)(6) / adjusted EBITDA(5) N/A (7) 2.9 3.4
Adjusted EBITDA(5) / financial expense(5) N/A (7) 6.8 6.2
(1) Excludes amortization of financing fees and commitments fees but includes impact of interest rate swaps.
(2) Taking into consideration the interest rate swaps in effect at the end of each fiscal year.
(3) Net secured indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments,
less cash and cash equivalents and principal on Senior Unsecured Debenture and Senior Unsecured Notes.
(4) Excluding Atlantic Broadband’ and other non-significant unrestricted subsidiaries' cash and cash equivalents and non-recourse First Lien Credit Facilities.
(5) Calculation excludes Atlantic Broadband. Fiscal 2013 adjusted EBITDA includes seven months of operating results for Peer 1 Hosting.
(6) Net indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments, less
cash and cash equivalents.
(7) Specific guidance on these ratios cannot be provided given that Atlantic Broadband's segmented financial guidance are not provided.
In fiscal 2015, the financial leverage ratios relating to net indebtedness and net secured indebtedness over adjusted EBITDA should decline due
to the projected increase in adjusted EBITDA, combined with a reduction in Indebtedness from generated free cash flow. . The financial expense
coverage ratio should increase mainly as a result of the projected increase in adjusted EBITDA. The % of fixed rated indebtedness is expected
to decline by August 31, 2015, as the interest rate swaps on a principal value of US$200 million will mature on July 25, 2015.
OUTSTANDING SHARE DATA
A description of Cogeco Cable’s share data at September 30, 2014 is presented in the table below. Additional details are provided in Note 17 of
the consolidated financial statements.
(in thousands of dollars, except number of shares/options) Number of
shares/options Amount $
Common shares
Multiple voting shares 15,691,100 98,346
Subordinate voting shares 33,394,631 911,067
Options to purchase subordinate voting shares
Outstanding options 730,702
Exercisable options 270,454
FINANCING
On August 27, 2014, the Corporation completed, pursuant to a private placement, the issuance of US$25 million ($27.2 million) Senior Secured
Notes Series A net of transaction costs of $0.1 million, for net proceeds of $27.1 million and of US$150 million ($163.4 million) Senior Secured
Notes Series B net of transaction costs of $0.9 million, for net proceeds of $162.5 million. The Senior Secured Notes Series A bear interest at
4.14% per annum payable semi-annually and mature on September 1, 2024, and the Senior Secured Notes Series B bear interest at 4.29% per
annum payable semi-annually and mature on September 1, 2026. The Senior Secured Notes Series A and B are redeemable at any time at
Cogeco Cable’s option, in whole or in part, at 100% of the principal amount plus a make-whole premium. 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.
On June 30, 2014, Cogeco Cable's subsidiary, Atlantic Broadband, amended its First Lien Credit Facilities. Pursuant to the amendment, US$15
million of the Term Loan A Facility was converted into the Revolving Facility. In addition, the Revolving Facility was increased by US$35 million
of which the proceeds were used to reimburse a portion of the Term Loan B. Giving effect to this amendment, the amount available under the
Revolving Facility now amounts to US$150 million. However, the combined amounts borrowed under the Term Loan A, Term Loan B and the
Revolving Facility have not changed. All other terms and conditions related to covenants, interest rates and maturity remained the same. In
connection with the amendment, transaction costs of US$0.4 million were incurred.