Page 54 - SIGA Annual Report 2014

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NOTES TO
THE FINANCIAL
STATEMENTS
YEAR ENDED
MARCH 31, 2014
54
11. LONG-TERM DEBT (CONTINUED)
Casino Projects Financing (continued)
Principal repayments required for the above loans, based on maturity dates, are as follows:
2015
$ 5,455,333
2016
5,456,333
2017
5,456,333
2018
5,455,332
2019
31,129,744
Due to the uncertainty surrounding the terms that would currently be available for debt of similar terms and maturities, fair value
information has not been disclosed as fair value cannot be reliably measured.
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 April 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. An additional swap was subsequently entered in 2013 related to Dakota Dunes. This arrangement fixed the interest
rate for the loan at 2.08% over the term of the loan. This swap term is April 2023. A liability of $5,203,754 has been recorded at
March 31, 2014 (2013 – $7,319,250), representing the fair value of the instruments. Changes to the fair value are recorded as an
unrealized gain or loss in the current year. The notional amount of the interest rate swaps at March 31, 2014, were $12,716,667
for Dakota Dunes, $14,838,104 for Living Sky, $11,199,994 for Painted Hand, and $13,830,000 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, 2014, no amount is owing on the line of credit (2013 – $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%
(2013 – 11.30% to 13.72%) per annum.
The minimum lease payments under the finance lease obligation are as follows:
March 31, 2014
March 31, 2013
Total future minimum lease payments
$ 86,138,870
$ 94,386,463
Less future finance charges on finance leases
(43,357,252)
(50,366,487)
Present value of finance lease obligation
42,781,618
44,019,976
Less current portion of finance lease obligation
(1,397,799)
(1,238,360)
Finance lease obligation
$ 41,383,819
$ 42,781,616