Algonquin Power & Utilities Corp. – Consolidated Financial Statements ALGONQUIN POWER & UTILITIES CORP.  Notes to the Consolidated Financial Statements  December 31, 2012 and 2011   (in thousands of Canadian dollars except as noted and amounts per share)  24. Financial instruments (continued) 25. Subsequent event 26. Comparative figures APCo is party to an interest rate swap whereby, the Company pays a fixed interest rate of  4.47% on a notional amount of $64,276 and receives floating interest at 90 day CDOR, up to  the expiry of the swap in September 2015. At December 31, 2012, the estimated fair value  of the interest rate swap was a liability of $4,778 (2011 – liability of $6,975). This interest  rate swap is not being accounted for as a hedge and consequently, changes in fair value are  recorded in earnings as they occur.  Subsequent to year-end, effective January 1, 2013, the Company issued 100 redeemable Series  C preferred shares in exchange for Class B limited partnership units issued by the St. Leon Wind  Energy LP (“St. Leon LP”), a subsidiary of APCo and the legal owner of the St. Leon facility (note  19). Thirty six of the Class C preferred shares are owned by related parties controlled by  executives of the Company. The preferred shares are mandatorily redeemable in 2031 have a  contractual cumulative cash dividend paid quarterly based on a prescribed payment schedule out  to the redemption date in 2031. Consequently, these shares will be accounted for as liabilities in  the financial statements. The cumulative dividends are indexed in proportion to the increase in  CPI over the term of the shares. The dividend is intended to approximate the distributions that  otherwise would have accrued to holders of Class B limited partnership units. Upon redemption in 2031, the shares are to be redeemed for $53,400 per share. The Series C  Shares are convertible into common shares at the option of the holder and the Company, at any  time after May 20, 2031 and before June 19, 2031, at a conversion price of $53,400 per share.  The Class C preferred shares will initially be measured at its estimated fair value of $18,205  based on the present value of the expected contractual cash flows including dividends and  redemption amount, discounted at a rate of 5.0%. The recognition of the initial fair value of  $18,205 will result in an adjustment to equity of the shareholders of the Company as the Class B  shares had a nominal carrying amount prior to the exchange. The preferred shares will be  accounted for under the effective interest method, resulting in accretion of interest expense over  the term of the shares. Dividend payments are recorded as a reduction of the Class C Preferred  Share carrying value.  Certain of the comparative figures have been reclassified to conform to the financial statement  presentation adopted in the current year.  139 2012 Annual Report Estimated dividend and redemption payments due in the next five years and  thereafter are:  2013  $ 802 2014  1,078 2015  1,046 2016  919 2017  870 Thereafter to 2031, including redemption amount  26,706 Less amounts representing interest  (13,216) Final redemption of Class C Preferred Shares $ 18,205 (c) Risk management (continued)  Interest rate risk (continued) 