ANNUAL REPORT 2013 21 Working Capital Credit Facility Net Interest-Bearing Debt Term Loan Facility Prior to the American Pride Acquisition in October 2013, average  short-term borrowings in 2013 were approximately $52.0 million  compared to approximately $100.0 million in 2012. The decrease in short-term borrowings was the result of positive cash flow  generated from operations and decreases in working capital. Full details of the financing arrangements are included in  notes 12 and  13  to the Consolidated Financial Statements. At the end of the fourth quarter of 2013, the Company had  $67.9 million of unused borrowing capacity taking into account  both margin calculations and the total line availability.  The terms of the long-term debt facility required us to protect 50%  of the variable interest rate for a fixed rate until December 2013.  A derivative financial instrument was therefore purchased in the  second quarter of 2012 which results in the LIBOR rate on 50% of  the Term Loan being capped at 1.5% until April 2014. Also on  May 3, 2012, we entered into an interest rate swap to exchange  floating three month LIBOR for a fixed rate on our Term Loan, with  an embedded floor of 1.5%, for a notional amount of $100.0 million  for the period of April 4, 2014 until April 4, 2016. On a quarterly  basis starting in 2014, we are required to pay the fixed swap rate  and expect to receive the floating three month LIBOR rate (but no  Minimum repayments are required on an annual basis, plus  additional payments based on a leverage test, up to 50% of defined  excess cash flow beginning in 2013, based on the previous year’s  cash flow. In March 2013, we paid 25% of our excess cash flow for  2012 which was $13.8 million. Due to this excess cash flow  payment, which in accordance with the terms of the debt  agreement is applied against the principal payments otherwise  due, there were no additional repayments in 2013 and there will be  no regularly scheduled repayments in 2014. There will be no  excess cash flow payment in 2014 because the defined excess cash  flow was negative in 2013 due primarily to the American Pride  Acquisition described in Section 5.1 of this MD&A. We also entered into interest rate swaps to hedge a portion of our  working capital loans. The swaps are for a notional $50 million for  the period of May 4, 2012 to March 4, 2014, and then for $30 million  for the period March 5, 2014 to March 4, 2015, at an average LIBOR  rate of 0.719% and 0.726%, respectively. These swaps effectively fix  the interest rate on a portion of our working capital loans. Excluding any major acquisitions, we believe the asset-based  working capital facility should be sufficient to fund all of the  Company’s current cash requirements for 2014. Substantially, all tangible and intangible assets (excluding  working capital) of the Company are pledged as collateral for the  Term Loan. The amortization and maturity date are unchanged, meaning  the full amount of the remaining debt is due to be paid in  December 2017. At the end of the fourth quarter of 2013, we were borrowing at the  following rates: High Liner Foods entered into a $250.0 million senior secured term  loan facility (“Term Loan”) in December 2011. This facility was  amended in February 2013 resulting in the following changes: We entered into a $120.0 million asset-based working capital  facility in November 2010 with the Royal Bank of Canada as  collateral and administrative agent. In December 2011, this facility was amended to increase it to $180.0 million, of which  $125.0 million is allocated to our U.S. operations and the remainder  is allocated to our Canadian operations. In February 2013, the  facility was amended again with changes to interest rates and  increased flexibility around acquisitions being the major changes.  The working capital facility expires in 2016 and provides, after the February 2013 amendment, for the following based on the  “Average Adjusted Aggregate Availability” as defined in the credit agreement: Our net interest-bearing debt is comprised of working capital  credit and term loan facilities, and finance leases, less cash. Our  net interest-bearing debt position increased to a liability of  $332.0 million at December 28, 2013 compared to a liability of  $311.8 million at December 29, 2012. This $20.2 million increase  reflects the use of debt to acquire American Pride, partially offset  by positive cash flow generated from operations. This acquisition  is explained in Section 5.1 “The American Pride Acquisition” of  this MD&A.  As the interest rates on the long-term debt facility were fixed on  only a portion of the US$250.0 million face value of the debt, the  other portion of the debt continues to be at variable interest rates.  As such, we expect that there will be fluctuations in interest  expense due to changes in interest rates if LIBOR is higher than the  floor of 1.25%. less than 1.5%), effectively fixing the rate between 1.747% to  1.997%. See Section 4.5 for a description of the implication of such  swap on our financial results. • Interest rates decreased to LIBOR plus 3.5%, with a LIBOR floor of  1.25% from LIBOR plus 5.5% and a floor of 1.5%; • The available amount or “basket” for dividends and normal  course issuer bid (“NCIB”) payments was increased to  $15.5 million from the previous limit of $8.0 million. Dividends  and NCIB payments are allowed beyond the basket as defined  free cash flow is generated and not required for debt repayment;  • A prepayment penalty of 1% was in place until February 8, 2014;  • Leverage ratios were amended and step down leverage  requirements removed so that the debt to EBITDA ratio limit is  now 4.5x for the term of the loan; • The interest coverage covenant was removed; and  • Other minor changes relating to relaxing the requirements  around investments and acquisitions.  • Canadian Prime Rate loans denominated in CAD and Canadian  Base Rate and U.S. Prime Rate loans denominated in USD at Prime  or Base Rate plus 0.00% to 0.75%; • Bankers’ Acceptances (BA) loans at BA rates plus 1.75% to 2.25%;  • LIBOR advances at LIBOR plus 1.75% to 2.25; and • Unused line fees of 0.25% to 0.375%. • Canadian Prime Rate loans denominated in CAD and Canadian  Base Rate and U.S. Prime Rate loans denominated in USD at Prime  or Base Rate plus 0.50%; • Bankers’ Acceptances (BA) loans at BA rates plus 2.00%;  • LIBOR advances at LIBOR plus 2.00%; and • Unused line fees of 0.375%.