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Liquidity & Capital Resources
The Company will utilize cash from operations and the issuance of commercial paper and/or credit facility draws to fund liabilities as they become due, finance capital expenditures and pay common share dividends throughout 2009. At December 31, 2008, the Company had $6.5 billion (2007 – $5.6 billion) of committed credit facilities excluding the Southern Lights project financing described below, of which $3.4 billion was drawn or used to backstop commercial paper. The Company has provided EEP with a revolving credit agreement for up to US$0.5 billion resulting in net available liquidity at December 31, 2008 for the Company of $3.0 billion, inclusive of cash and cash equivalents of $0.5 billion. The following table provides details of the company's credit facilities at December 31, 2008.
(millions of Canadian dollars) |
Expiry Dates |
Total Facilities |
Credit Facility Draws |
Commercial Paper Backstop |
Available |
||||||
| Liquids Pipelines | 2010 - 2011 | 1,300.0 | 525.5 | – | 774.5 | ||||||
| Gas Distribution and Services | 2009 - 2010 | 1,014.7 | 11.1 | 874.5 | 129.1 | ||||||
| Corporate 1 | 2010 - 2013 | 4,185.8 | 962.3 | 1,075.1 | 2,148.4 | ||||||
| 6,500.5 | 1,498.9 | 1,949.6 | 3,052.0 | ||||||||
| Southern Lights project financing 2 | 2014 | 2,028.1 | 1,358.9 | – | 669.2 | ||||||
| Credit facilities | 8,528.6 | 2,857.8 | 1,949.6 | 3,721.2 |
- Total facilities exclusive of $49.0 million commitment of Lehman Brothers Bank given the bankruptcy filing of its parent in September 2008.
- Total facilities inclusive of $140.2 million which is available if certain conditions related to the project are met.
In January 2009, a credit facility established in December 2008, was increased by $0.2 billion to $0.5 billion as a result of new lender commitments, providing additional liquidity. The Company will look to access the capital markets for long-term financing as projects approach the in service date and to manage overall liquidity. The Company was successful in accessing $0.5 billion from the debt capital markets in the fourth quarter of 2008, as noted below in Financing Activities.
During 2008, the Company established $0.4 billion and US$1.3 billion in project financing that is non-recourse to the Company, for the Canadian and U.S. components of the Southern Lights project. These facilities are sufficient to fund the debt component of the Southern Lights financing and comprise construction, cost overrun and letter of credit facilities that mature in 2014, which is four years beyond the expected completion date of the project. At December 31, 2008, $0.3 billion and US$0.9 billion were drawn under the project financing facilities.
The Company's credit facility agreements include standard default and covenant provisions whereby accelerated repayment may be required if the Company were to default on payment or violate certain covenants. As in prior years, the Company expects to continue to comply with these provisions and therefore not trigger any early repayments.
The Company continues to manage its debt to capitalization ratio to maintain a strong balance sheet. The Company's debt to capitalization ratio at December 31, 2008, including short-term borrowings but excluding non-recourse debt and project financing was 60.7%, compared with 62.7% at the end of 2007. Including all debt, the capitalization ratio was 66.6% compared with 66.5% at the end of 2007.
The Company invests its surplus cash in short-term investment grade instruments with credit worthy counterparties. At December 31, 2008, there were $474.2 million of short-term investments intended to enhance access to short-term liquidity given the recent market turbulence. Short-term investments were $87.8 million in 2007 and $66.8 million in 2006.
Excluding current maturities of long-term debt, the Company has a positive working capital position, consistent with December 31, 2007.
(millions of Canadian dollars) |
2008 | 2007 | ||||
| Cash and cash equivalents | 541.7 | 166.7 | ||||
| Accounts receivable and other | 2,322.5 | 2,388.7 | ||||
| Inventory | 844.7 | 709.4 | ||||
| Short-term borrowings | (874.6 | ) | (545.6 | ) | ||
| Accounts payable and other | (2,411.5 | ) | (2,213.8 | ) | ||
| Interest payable | (101.9 | ) | (89.1 | ) | ||
| Working capital | 320.9 | 416.3 |
Changes in commodity prices impact accounts receivable, inventory and accounts payable at Tidal Energy and EGD.