Cogeco 2014 Annual Report Download - page 75

74 COGECO CABLE INC. 2014 Consolidated financial statements
6. BUSINESS COMBINATIONS
BUSINESS COMBINATIONS IN FISCAL 2013
On November 30, 2012, the Corporation completed the acquisition of all the outstanding shares of Atlantic Broadband, an independent cable
system operator formed in 2003, then serving about 485,000 Primary Service Units ("PSU") and providing Analogue and Digital Television,
as well as HSI and Telephony services. The acquisition is an attractive entry point into the American market, providing a significant increase
in PSU base with further growth potential, a high quality network infrastructure and the ability for the Corporation’s management to leverage
its core knowledge and operational experience. The transaction, valued at US$1.36 billion, was financed through a combination of cash on
hand, a draw-down on the existing Term Revolving Facility of approximately US$588 million and US$660 million of borrowings under a then
new committed non-recourse debt financing at Atlantic Broadband. Atlantic Broadband operates cable systems in Western Pennsylvania,
South Florida, Maryland/Delaware and South Carolina.
On January 31, 2013, the Corporation acquired approximately 96.57% of the issued and outstanding shares of Peer 1 Network Enterprises,
Inc. ("Peer 1 Hosting”). The transaction, valued at approximately $649 million, was financed by a then new secured revolving credit facilities
in the amount of approximately $250 million as well as a then new secured term credit facilities in the amount of approximately $400 million
both having a maturity of four years. On April 3, 2013, Cogeco Cable Inc. completed the acquisition of the remaining 3.43% of the issued
and outstanding shares of Peer 1 Hosting pursuant to the compulsory acquisition provisions in Section 300 of the Business Corporations
Act ("British Columbia") for cash consideration of $17 million. Peer 1 Hosting is a global web infrastructure and cloud company, specializing
in managed IT, managed and dedicated hosting, colocation and cloud services which, at the time of the acquisition, had 20 data centres
and 56 points of a presence across North America and Europe. This acquisition enhances Cogeco Cable's footprint and builds on its strategic
initiatives by increasing scale in an attractive industry segment with significant growth prospects in the state of the art data centre platforms.
Peer 1 Hosting's primary network centre and head office are located in Vancouver, Canada.
During the first quarter of fiscal 2014, the Corporation finalized the purchase price allocation of Atlantic Broadband which remained unchanged
from that presented in the 2013 Annual consolidated financial statements, except as noted below. The purchase price allocation of Peer 1
Hosting was finalized by Cogeco Cable during the second quarter of fiscal 2014. During the fourth quarter of fiscal 2014 the purchase price
allocations of Atlantic Broadband and Peer 1 Hosting were modified to adjust for an error in the presentation of deferred tax assets acquired
and deferred tax liabilities assumed. The error in presentation is that the Corporation, in 2013, did not offset deferred tax assets and liabilities
related to the same taxation authorities, as required by IAS 12.The impact of the modification reduced deferred tax assets and deferred tax
liabilities by $105.9 million.
The final purchase price allocations of Atlantic Broadband and Peer 1 Hosting, reflecting the modification, are as follows:
Peer 1
Hosting Atlantic Broadband TOTAL
Final Final Final
(In thousands of Canadian dollars) $$$
Consideration paid
Purchase of shares 494,796 337,779 832,575
Working capital adjustments — 5,415 5,415
Repayment of secured debts and settlement of options outstanding 170,872 1,021,854 1,192,726
665,668 1,365,048 2,030,716
Net assets acquired
Cash and cash equivalents 10,840 5,480 16,320
Restricted cash 8,729 —8,729
Trade and other receivables 12,772 12,012 24,784
Income taxes receivable 2,797 3,907 6,704
Prepaid expenses and other 3,855 1,370 5,225
Other assets 2,462 —2,462
Property, plant and equipment 150,013 302,211 452,224
Intangible assets 144,231 711,418 855,649
Goodwill 410,454 522,215 932,669
Deferred tax assets 1,599 —1,599
Trade and other payables assumed (26,512) (27,620) (54,132)
Provisions — (721) (721)
Deferred and prepaid revenue and other liabilities assumed (3,388) (7,697) (11,085)
Long-term debt assumed (1,735) — (1,735)
Deferred tax liabilities (50,449) (157,527) (207,976)
665,668 1,365,048 2,030,716