11. Short-Term Debt
Short-term debt was $90.0 at December 31, 2007 (2006 – $157.9). The weighted average interest rate on this debt was 5.17 percent (2006 – 5.51 percent). The company had an unsecured line of credit available for short-term financing (net of letters of credit of $23.9 and direct borrowings of $NIL) in the amount of $51.1 at December 31, 2007 (2006 – $57.7). In addition, the company is authorized to borrow a further $660.0 under its commercial paper program.
The line of credit was renewed in September 2007 for the period to May 2009; it will be renewable annually each May beginning in 2009. Outstanding letters of credit and direct borrowings reduce the amount available. The line of credit is subject to financial tests and other covenants. The principal covenants require a debt-to-capital ratio of less than or equal to 0.60:1, a long-term debt-to-EBITDA (as defined in the agreement to be earnings before interest, income taxes, provincial mining and other taxes, depreciation, amortization and other non-cash expenses, and unrealized gains and losses in respect of hedging instruments) ratio of less than or equal to 3.5:1, tangible net worth in an amount greater than or equal to $1,250.0 and debt of subsidiaries not to exceed $650.0. The line of credit is subject to other customary covenants and events of default, including an event of default for non-payment of other debt in excess of Cdn $40.0. Non-compliance with such covenants could result in accelerated payment of amounts due under the line of credit, and its termination. The company was in compliance with the above-mentioned covenants at December 31, 2007.