Cogeco 2014 Annual Report Download - page 99

98 COGECO CABLE INC. 2014 Investor information
INVESTOR INFORMATION
CONSOLIDATED CAPITALIZATION
At August 31, 2014 2013 (1) 2012
(in thousands of dollars) $$ $
Indebtedness 2,744,746 2,944,182 1,069,112
Shareholders' equity 1,508,256 1,342,940 1,188,431
Total 4,253,002 4,287,122 2,257,543
(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated
financial statements.
CREDIT RATINGS
On July 29, 2014, Dominion Bond Rating Service (“DBRS”) confirmed their ratings on the Senior Secured Debentures and Notes to “BBB (low)”,
on the Senior Unsecured Notes to "BB" and confirmed the 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 to 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. Obligations rated in the “BB” category are speculative, non-investment grade credit quality. The capacity for the payment of financial
obligations is uncertain and vulnerable to future events. DBRS has assigned a recovery rating of “RR5” to Cogeco Cable’s Senior Unsecured
Notes reflecting the likelihood that holders would recover 10% to 30% of their value in a default scenario.
On April 28, 2014, Standard & Poor’s Ratings Services (“S&P”) confirmed their ratings on the Senior Secured Debentures and Notes to “BBB” ,
on the Senior Unsecured Notes to "BB-" and confirmed the corporate credit rating of “BB+”. 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. Obligations rated in the “BB” category
are speculative, non-investment grade credit quality. Such obligation faces major ongoing uncertainties or exposure to adverse business, financial,
or economic conditions that could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. S&P assigned a
recovery rating of ‘6’ to Cogeco Cable’s Senior Unsecured Notes reflecting the likelihood that holders could expect negligible (0%-10%) recovery
in the event of a payment default.
On September 30, 2014, Fitch Ratings (“Fitch”) has confirmed the Issuer Default Rating ("IDR") of Cogeco Cable to “BB+” and has also confirmed
the rating on Senior Secured Notes to “BBB-” and Senior Unsecured Notes to “BB+”. 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. Obligations rated in the "BB" category are regarded as speculative and indicate an
elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business
or financial alternatives may be available to allow financial commitments to be met.
Atlantic Broadband
On August 14, 2014, Moody’s Investors Service (“Moody’s”) maintained their ratings on Atlantic Broadband’s credit facilities at "Ba3", one notch
above the "B1" corporate family rating. Obligations rated Ba are judged to be speculative and are subject to substantial credit risk. Moody’s
appends numerical modifiers 1, 2, and 3 to each generic rating classification from "Aa" through "Caa". The modifier 1 indicates that the obligation
ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category. Moody’s also maintained the Loss Given Default ("LGD") on Atlantic Broadband’s credit facilities at 3
(which reflect a loss range between 30% and 50%). LGD assessments are opinions about expected loss given default expressed as a percent
of principal and accrued interest at the resolution of the default.
On April 1, 2014, S&P confirmed their ratings on Atlantic Broadband’s credit facilities to "BB", one notch above the "BB-" Issuer Rating. S&P has
assigned a recovery rating of “2” to Atlantic Broadband’s credit facilities, indicating lenders can expect substantial (70%-90%) recovery in the
event of a payment default.