Every month the 104 Corporation transfers any cash balance from the Project Account into the Capital Reserve Account. By agreement, the project Account keeps only a balance equal to two month of its operating/ administrative budget.
The sources of cash for the Project Account are:
The Capital Reserve account is used to:
The sources of cash for the Capital Reserve Account are:
Senior Debt Service Coverage Ratio (DSCR)
The Senior Debt Service Coverage Ratio must be 1.2:1 at any time during the first 36 months after December 31,1997, the Date of Acceptance, and 1.3:1 at any time after the 36th month after the Date of Acceptance.
If the Senior Debt Service Ratio is larger than 1.3:1 but less than 1.6:1 then all funds in excess of expenditures and bond repayment are accumulated in the Capital Reserve Fund where they are place in permitted investments. If the Senior Debt Service Ratio is larger than 1.6:1, provisions in the agreements allow for some of the funds to be paid to the Province. The Province has declined to exercise this option, and has directed the Corporation to reduce the debt or to forego toll increases where possible.
Major Maintenance Reserve Fund (MMRF)
The Major Maintenance Reserve Fund ensures that once the three-year warranty runs out on the highway there are funds available to pay for major maintenance costs as repaving.
The first contribution to the MMRF fund came from the Subordinate Notes, which were issued in November 1997. This was a total amount of $500,000. The Financing Agreements require that specific quarterly contributions be made to the MMRF from the Capital Reserve Fund and these contributions are adjusted annually based on maintenance requirements.
Cash Flow Diagram
Highway 104 Western Alignment Corporation