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## 24. Financial instruments (continued) 

## (c) Risk management (continued) 

## Interest rate risk (continued) 

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. 

## 25. Subsequent event 

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. 

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## 26. Comparative figures 

Certain of the comparative figures have been reclassified to conform to the financial statement presentation adopted in the current year. 

