Financial Report - Veresen Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Commitments and Contingencies
Veresen has operating leases for office premises and vehicles. Included in general, administrative and project development expense are
lease expenses of $4.3 million (2011 – $2.6 million). Expected future minimum lease payments under the operating leases are as follows:
For the years ending December 31
Operating leases
2013 6.9
2014 5.7
2015 5.4
2016 4.7
2017 4.1
Thereafter 25.5
Total minimum lease payments 52.3
Certain of the Company’s gas-fired power generation facilities have entered into agreements with natural gas suppliers to purchase,
in aggregate, a minimum of approximately 15.3 million cubic feet per day, at an estimated cost of approximately $13.3 million in 2013
and $8.7 million in 2014. Veresen has guaranteed some of these obligations.
On April 20, 2012, the Company, through a wholly-owned subsidiary, entered into a $36.3 million construction contract relating to
two hydroelectric run-of-river facilities, Dasque Creek (12 MW) and Middle Creek (8 MW), and a 69 kilovolt transmission line. As
at December 31, 2012, there was $23.2 million outstanding on this contract. In addition, the Company, through the same subsidiary,
entered into contracts with an aggregate value of $18.9 million related to installation of turbines and electrical transmission lines, of
which $7.4 million was outstanding at December 31, 2012.
On March 30, 2012, the Company’s equity accounted investees, Aux Sable Liquid Products, L.P., Aux Sable Extraction LP and Aux Sable
Canada Ltd., were served with a Statement of Claim relating to differences in interpretation of certain terms of the NGL Sales Agreement.
The Company’s share of the potential exposure, through its equity investment, is approximately $13.0 million (42.7%). At this time, the
Company is unable to predict the likely outcome of this matter.
Note 18. Financial Instruments and Risk Management
Financial Instruments
The following table summarizes the Company’s financial instrument carrying and fair values as at December 31, 2012:
Financial
Financial
assets at liabilities at Nonamortized
amortized financial Fair
cost cost instruments Total value (1)
Assets
Cash and short-term investments 16.1 16.1 16.1
Restricted cash 5.8 5.8 5.8
Distributions receivable 39.9 39.9 39.9
Receivables and accrued receivables 72.6 72.6 72.6
Due from jointly-controlled businesses 49.6 49.6 49.6
Other assets 0.8 16.6 17.4 0.8
Liabilities
Payables and accrued payables 58.2 2.4 60.6 58.2
Dividends payable 12.9 12.9 12.9
Senior debt 1,259.3 1,259.3 1,322.8
Subordinated convertible debentures 86.2 86.2 93.1
Other long-term liabilities 7.7 38.5 46.2 7.7
(1) Fair value excludes non-financial instruments.
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