Headquartered in Toronto, Maple Leaf Foods Inc. is a food processing company with operations across Canada, the United States, Europe, and Asia. It produces meats and meal products, as well as fresh and frozen pork, chicken, and turkey products, and also produces livestock nutrition products and pet foods in its agribusiness group. Note 8 to the company's 2009 financial statements provides details of Maple Leafs long-term debt. An excerpt follows:
8. e. Long-term debt
The Company has an unsecured revolving debt facility with a principal amount of $870.0 million. The maturity date is May 31, 2011. This facility can be drawn in Canadian dollars, U.S. dollars, or British pounds, and bears interest based on bankers' acceptance rates for Canadian dollar loans and LIBOR for U.S. dollar and British pound loans. As at December 31, 2009, $476.6 million of the revolving facility was utilized (2008: $559.8 million)...
Required:
a. What is a revolving debt facility?
b. The revolving debt facility is described as unsecured. What does this mean?
c. Why would a company want to be able to borrow in Canadian dollars, U.S. dollars or British pounds? How does this capability affect the company's financial risk?
d. How much is outstanding on the revolving debt facility as at December 31, 2009? Do you know what currency the company borrowed that sum in? Explain.