Page 55 - 2012_Annual Report

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Saskatchewan Indian Gaming Authority Inc.
Notes to the Financial Statements
year ended March 31, 2012
53
11. LONG-TERM DEBT (CONTINUED)
CASINO PROJECTS FINANCING (CONTINUED)
In order to manage its interest rate risk exposure, SIGA entered into separate interest rate swap arrangements for the Dakota
Dunes, Living Sky and Painted Hand construction projects on December 12, 2007. These arrangements fixed the interest rates
for the loan for each construction project at 4.94%, 5.09% and 5.09% respectively over the term of the loans. These loan terms
are March 2023, March 2024, and March 2024 respectively. The interest rate swap arrangements came into effect for the
Dakota Dunes construction project on April 1, 2008 and came into effect for the Living Sky and Painted Hand construction
projects on April 1, 2009. A liability of $7,636,994 has been recorded at March 31, 2012 (2011 – $5,147,896, April 1, 2010 –
$5,492,969), representing the fair value of the instruments. Changes to the fair value are recorded as an unrealized gain or loss
in the current period. The notional amount of the interest rate swaps at March 31, 2012, were $15,516,667 for Dakota Dunes,
$15,243,528 for Living Sky, and $14,419,444 for Painted Hand.
SIGA has established an unsecured $2,000,000 line of credit with a financial institution. Interest is charged on the line of credit
at the financial institution’s prime rate plus 1%. At March 31, 2012, no amount is owing on the line of credit (2011 – $nil).
12. FINANCE LEASE OBLIGATION
On December 23, 2004, SIGA entered into an agreement with STC Casino Holdings Limited Partnership, a related party, for lease
of Dakota Dunes Casino on Whitecap Dakota First Nation. Beginning in April 2007, SIGA leased the property from that Partnership
for approximately 20 years at an annual cost of $2,248,477. In 2011, there was an addition to this capital lease, for approximately
16 years, at an annual cost of $380,969. In 2012, there was a further addition to this lease for approximately 15 years, at an
annual cost of $60,571.
On October 26, 2005, SIGA entered into an agreement with PHC Holdings Limited Partnership, a related party for lease of Painted
Hand Casino in Yorkton. Beginning in February 2009, SIGA leased the property from that Partnership for approximately 19 years at
an annual cost of $1,646,400.
On January 26, 2006, SIGA entered into an agreement with FHQ Casino Holdings Limited Partnership, a related party, for lease of
Living Sky Casino in Swift Current. Beginning in December 2008, SIGA leased the property from the Partnership for approximately
19 years at an annual cost of $2,195,200.
Interest rates underlying all obligations under finance leases are fixed at respective contract dates ranging from 11.30% to 13.72%
(2011 – 12.18% to 13.72%) per annum.
The minimum lease payments under the capital lease obligation are as follows:
March 31,
March 31,
April 1,
2012
2011
2010
Total future minimum lease payments
$ 100,918,080 $ 109,094,115 $ 106,366,464
Less future finance charges on finance leases
(55,855,051)
(63,571,987)
(62,909,832)
Present value of finance lease obligation
45,063,029
45,522,128
43,456,632
Less current portion of finance lease obligation
(1,043,052)
(852,693)
(749,871)
Finance lease obligation
$ 44,019,977 $ 44,669,435 $ 42,706,761
As at March 31, 2012, scheduled future minimum lease payments of the finance lease obligation are as follows:
1 year
1-5 years More than 5 years
Future minimum lease payments
$ 6,531,617 $ 26,126,469 $ 68,259,994
Present value of finance lease obligation
6,178,984
18,486,883
21,627,546
Due to the related party nature of the capital lease obligation, fair value information has not been disclosed as fair value cannot be
reliably measured.