(a) Operating Line:
The Canadian operating line of credit ("Operating Line") may be drawn in either CAD$ or US$ advances, and bears interest at bank prime plus a margin or, at the Company's option, at rates for Bankers' Acceptances or LIBOR based loans plus a margin, and in all cases dependent upon a financial ratio of total debt divided by twelve months' trailing EBITDA1. Borrowing levels under the Operating Line are subject to a borrowing base calculation dependent on certain accounts receivable and inventories.
The Operating Line is secured by a general security agreement which includes a security interest in all accounts receivable and inventories, charges against timber tenures, and mortgage security on sawmills. The Operating Line is subject to certain financial covenants including a minimum working capital requirement, a maximum ratio of total debt to total capitalization and a minimum net worth calculation. As at December 31, 2012 other than outstanding letters of credit included in the line utilization the Operating Line was undrawn (December 31, 2011 - $nil).
The maturity date of the Operating Line is July 28, 2015. See also Note 16(b).
(b) Long-term debt:
The Revolving Term Line may be drawn in either CAD$ or US$ advances, and bears interest at bank prime plus a margin or, at the Company's option, at rates for Bankers' Acceptances or LIBOR based loans plus a margin, and in all cases dependent upon a fin ancial ratio of total debt divided by twelve months' trailing EBITDA(1).
The Revolving Term Line is available to a maximum of $200,000,000 and is secured by a general security agreement which includes a security interest in all accounts receivable and inventories, charges against timber tenures, and mortgage security on sawmills. The line is subject to certain financial covenants including a minimum working capital requirement and a maximum ratio of total debt to total capitalization and a minimum net worth calculation. The maturity date of the Revolving Term Line is July 28, 2015. See also Note 16(b).
As at December 31, 2012, the Revolving Term Line was drawn by US$30,200,000 (December 31, 2011 - US$30,200,000) revalued at the year-end exchange rate to $30,046,000 (December 31, 2011 - $30,713,000), and $105,000,000 (December 31, 2011 - $80,000,000) for total drawings of $135,046,000 (December 31, 2011 - $110,713,000).
The US$30,200,000 drawing under the Revolving Term Line has been designated as a hedge against the Company's investment in its U.S. operations and unrealized foreign exchange gains of $667,000 for the year ended December 31, 2012 (December 31, 2011 - $676,000 loss) arising on revaluation of the Non-Revolving Term Line were recognized in Foreign exchange translation differences in Other comprehensive income. For the fourth quarter, 2012 the unrealized foreign exchange loss of $353,000 (Quarter 4, 2011 - $942,000 gain) was recognized in Other comprehensive income.
Minimum principal amounts due on long-term debt within the next five years are follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------Twelve months ending Dec. 31, 2013 $ - Dec. 31, 2014 - Dec. 31, 2015 135,046 Dec. 31, 2016 - Dec. 31, 2017 ----------------------------------------------------------------------------- $ 135,046--------------------------------------------------------------------------------------------------------------------------------------------------------(1) EBITDA represents earnings before interest, taxes, depreciation,depletion and amortization.
