Page 54 - SIGA Annual Report 2013

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Saskatchewan Indian Gaming Authority Inc.
Notes to the Financial Statements
year ended March 31, 2013
54
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 swap terms are March 2023,
August 2024, and August 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 new swap
was entered in the year related to Dakota Dunes on March 22, 2013. This arrangement fixed the interest rate for the loan at 2.08% over
the term of the loan. This swap term is March 2023. A liability of $7,319,250 has been recorded at March 31, 2013 (2012 – $7,636,994),
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, 2013, were $14,116,667 for Dakota Dunes, $16,251,248 for Living Sky,
$12,266,662 for Painted Hand, and $15,317,843 for Dakota Dunes.
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, 2013, no amount is owing on the line of credit (2012 – $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%
(2012 – 11.30% to 13.72%) per annum.
The minimum lease payments under the finance lease obligation are as follows:
March 31, 2013
March 31, 2012
Total future minimum lease payments
$ 94,386,463
$ 100,918,080
Less future finance charges on finance leases
(50,366,487)
(55,855,051)
Present value of finance lease obligation
44,019,976
45,063,029
Less current portion of finance lease obligation
(1,238,360)
(1,043,052)
Finance lease obligation
$ 42,781,616
$ 44,019,977
As at March 31, 2013, scheduled future minimum lease payments of the finance lease obligation are as follows:
1-5
More than
1 year
years
5 years
Future minimum lease payments
$ 6,531,617
$ 26,126,469
$ 61,728,377
Present value of finance lease obligation
6,178,984
18,486,714
20,240,738
Due to the related party nature of the finance lease obligation, fair value information has not been disclosed as fair value cannot be
reliably measured.