We target maintaining a strong investment grade

We target maintaining a strong investment-grade credit rating to allow capital market access
at reasonable interest rates. On December 6, 2019, S&P affirmed our credit rating at “AA-”
with a stable outlook and on January 24, 2020, DBRS reaffirmed our credit rating at “A (high)”
with a stable trend. At March 31, 2020, our credit rating with S&P was “AA-” with a stable
outlook and with DBRS was “A (high)” with a stable trend.
On May 1, 2020, S&P Global Ratings revised our credit rating trend from “AA-” with a stable
outlook to “AA-” with a negative outlook while at the same time, affirming its “AA-” long-term
issuer credit and senior secured debt ratings on BC Ferries.
On May 27, 2020, DBRS changed the trend to negative from stable on the company’s “A
(high)” rating and senior secured bonds rating, reflecting the impact of COVID-19 on key
financial metrics during fiscal 2021 and uncertainties on speed of recovery.
In 2004, we entered into the Master Trust Indenture (May 2004) (“MTI”), a copy of which is
available at . The MTI established common security and a set of
common covenants for the benefit of our lenders. Our financing plan encompasses an ongoing
program capable of accommodating a variety of corporate debt instruments and borrowings
ranking pari passu . We do not currently view common share equity as a potential source of
capital and have no intention of offering common shares to the public or other investors.
Our debt service coverage (earnings before interest, taxes, depreciation, amortization, and
rent) is required to be at least 1.25 times the debt service cost under our credit agreement.
Under the MTI, securing this facility, we are subject to an additional indebtedness test that
prohibits additional borrowing if our leverage ratio exceeds 85%. At March 31, 2020, we
achieved a debt service coverage ratio of 2.68 and a leverage ratio of 71.9%.

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Credit Facility
Under our credit agreement with a syndicate of Canadian banks, we have available a revolving
facility in the amount of $155 million. Our $155 million credit facility was renewed on April 8,
2020 to extend the maturity date of the facility from April 2024 to April 2025. The facility is
available to fund capital expenditures and for other general corporate purposes. At March 31,
2020, March 31, 2019 and March 31, 2018 there were no draws on this credit facility.
As noted above, BC Ferries’ Credit Facility Agreement and KfW loan agreements require the
company to maintain a Debt Service Coverage Ratio (“DSCR”) of at least 1.25:1. Our
forecasts indicate the DSCR will fall below 1.25:1 during fiscal 2021.
On May 15, BC Ferries’ banking syndicate approved an Amendment to the Credit Facility
Agreement whereby the EBITDAR of the impacted quarters in fiscal 2021 (Q1, Q2, and Q3) will
be replaced by an average of the EBITDAR from the respective quarters in fiscal years 2018,
2019, and 2020. This will result in a modified DSCR calculation that will exceed 1.25:1. As a
condition, for the duration of the relief period BC Ferries will be required to maintain $50
million in unrestricted cash, which can be comprised of cash, short term investments, and
undrawn facility.