Changes in Financial Position
Cash generated from operating activities was $25.8 million in the fourth quarter of 2012, up from $1.4 million generated in the third quarter. The increase resulted largely from higher operating earnings. Also contributing to the increase was higher cash generated from working capital movements, principally related to property insurance and taxes paid in the previous quarter, offset in part by higher accounts receivable in part reflecting the improved pricing in the fourth quarter. Compared to the fourth quarter of 2011, cash generated from operating activities was down by $8.3 million, principally reflecting lower operating earnings.
Financing activities used cash of $11.1 million in the current quarter, compared to cash generated of $3.2 million in the previous quarter and cash used of $26.6 million in the fourth quarter of 2011. The current quarter cash flows included repayment of the $7.0 million drawn on the Company's operating bank loans in the previous quarter. In the immediately preceding quarter, financing cash outflows also included dividends of $3.6 million, representing dividends declared and paid during the quarter. In the fourth quarter of 2011, distributions paid to unitholders was $22.8 million. Finance payments in the current quarter were $4.1 million, principally relating to interest payments on the Company's debt. Finance payments in the third quarter of 2012 were $0.2 million primarily reflecting standby fees for the Company's operating loans, while finance payments in the fourth quarter of 2011 were at a similar level to the current quarter.
Cash used in investing activities in the current quarter was comprised of $12.8 million of capital expenditures slightly offset by $1.3 million in cash received from the Green Transformation Program and other government grants. Capital expenditures in the current quarter included equipment received related to the scheduled 2013 upgrades to the Northwood Pulp Mill turbines, as well as maintenance capital related to outages and payments related to previous period projects.
Liquidity and Financial Requirements
At December 31, 2012, CPPI had cheques issued in excess of cash on hand of $1.2 million. During the fourth quarter of 2012, the Company obtained a new $110.0 million operating loan facility replacing its previous $40.0 million operating loan facility. No amounts were drawn on the new bank facility, except for $1.7 million reserved for several standby letters of credit. In addition, the Company has a separate facility with a maturity date of November 30, 2013, to cover the $7.5 million standby letter of credit issued to BC Hydro under a power generation agreement.
CPPI has US$110.0 million of senior debt that is scheduled for repayment on November 30, 2013. This debt is in the form of unsecured US dollar private placement notes and bears interest at 6.41%.
The Company remained in compliance with the covenants relating to its operating loans and long-term debt during the quarter, and expects to remain so for the foreseeable future.
On February 13, 2013, the Board of Directors reinstated the Company's dividend, declaring a quarterly dividend of $0.05 per share, payable on March 5, 2013 to shareholders of record on February 26, 2013. In addition, reflecting the Company's current corporate structure and its latest outlook for 2013, the Board projects that it will declare further quarterly dividends of $0.05 per share through the balance of 2013, but will review the issuance of dividends on a quarterly basis.
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