Page 52 - 2008_2009_Annual_Report

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Saskatchewan Indian Gaming Authority Inc.
Notes to the Financial Statements
Year ended March 31, 2009
050
16. Capital Disclosures (continued)
SIGA entered into a credit agreement with financial institutions in order to obtain financing for the casino projects.
The agreement identified five financial covenants which are reported on a quarterly basis to the financial institutions.
SIGA monitors its capital structure using these covenants. The financial covenants are as follows:
(a) The senior fund debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio shall
be less than or equal to 2.5:1.0 for each fiscal quarter ending before or on December 31, 2008 and less than
or equal to 2.0 to 1.0 for each fiscal quarter ending on or after December 31, 2008;
(b) The interest coverage ratio shall not be less than 5.0:1.0;
(c) The total debt service coverage ratio shall not be less than 2.0:1.0;
(d) The fixed charge coverage ratio shall not be less than 1.0:1.0; and
(e) The earnings before interest, taxes, depreciation, amortization and rent (“EBITDAR”) coverage ratio shall
not be less than 2.0:1.0.
Ratios at year-end were 1.03, 13.24, 8.34, 1.11, and 5.28 respectively. In all instances during the year ended
March 31, 2009, SIGA was in compliance with the above covenants.
17. Financial Risk Management
Foreign exchange risk
SIGA faces exposure to the U.S./Canadian dollar exchange rate through the purchase of goods and services payable in
the U.S. dollar. The risk is not considered significant.
Interest rate risk
Interest rate risk is the risk of financial loss resulting from changes in market interest rates. SIGA has entered into
interest rate swaps which fix the interest rate on their casino project loans. At March 31, 2009, if interest rates at that
date had been 100 basis points lower with all other variables held constant, net income before distribution to SLGA
for the year would have been $3,581,088 lower, arising mainly as a result of higher unrealized losses on interest rate
swaps, partially offset by lower interest expense on variable borrowings. If interest rates had been 100 basis points
higher, with all other variables held constant, net income before distribution to SLGA for the year would have been
$3,581,088 higher, arising mainly as a result of lower unrealized losses on interest rate swaps, partially offset by
higher interest expense on variable borrowings.
Credit risk
SIGA does not extend credit to its gaming customers. Credit risk is limited to its accounts receivable balance which
consists primarily of an insurance claim and credit extended to business entities for business functions held at the
various casino locations. Credit risk is not considered significant.
Liquidity risk
Liquidity risk is the risk that SIGA is unable to meet its financial commitments as they become due or can only do so
at excessive cost. SIGA manages its cash resources based on financial forecasts and anticipated cash flows.