Charter 2002 Annual Report Download - page 54

long as the proceeds of the sale are applied in accordance with the asset sale covenant, and issuances as
a result of which the restricted subsidiary is no longer a restricted subsidiary and any remaining
investment in that subsidiary is permitted by the covenant limiting restricted payments.
‚ The indentures also restrict the ability of Renaissance Media Group and its restricted subsidiaries to
enter into certain transactions with aÇliates involving consideration in excess of $2 million without a
determination by the disinterested members of the board of directors that the transaction is on terms
no less favorable than arms-length, or transactions with aÇliates involving over $4 million with
aÇliates without receiving an independent opinion as to the fairness of the transaction to Renaissance
Media Group.
All of these covenants are subject to additional speciÑed exceptions. In general, the covenants of our
subsidiaries' credit agreements are more restrictive than those of our indentures.
Our subsidiaries' indentures include various events of default. A failure by Charter Holdings, Charter
Capital or any of their restricted subsidiaries to pay any indebtedness (other than under the Charter Holdings
notes) having a principal amount of $100 million or more (or any other default under any such indebtedness
resulting in its acceleration) would result in an event of default under the Charter Holdings indentures. Each
of the indentures governing Charter Communications, Inc.'s convertible senior notes includes a substantially
similar provision for Charter Communications, Inc., and its signiÑcant subsidiaries. As a result, an event of
default related to the failure to make a principal payment when due or the acceleration of the indebtedness
under the credit facilities of our subsidiaries or the CC V and Renaissance indentures could cause a cross-
default under the Charter Holdings indentures and the indentures governing Charter Communications, Inc.'s
convertible senior notes. See ""Ì Certain Trends and Uncertainties Ì Acceleration of Indebtedness of
Subsidiaries'' and ""Ì Certain Trends and Uncertainties Ì Restrictive Covenants.''
The Renaissance indenture contains a similar cross-default provision with a $10 million threshold that
applies to the issuers of the Renaissance notes and their restricted subsidiaries. The CC V indenture contains
events of default that include a cross-default to acceleration of, or failure to make payments when due or
within the applicable grace period, by CC V Holdings, CC V Holdings Finance or any restricted subsidiary, on
any indebtedness of $5 million or more. As a result, an event of default related to the failure to make a
payment when due or the acceleration of the indebtedness under the CC VIII Operating credit facility could
cause a cross-default under the CC V indenture. See ""Ì Certain Trends and Uncertainties Ì Acceleration of
Indebtedness of Subsidiaries.''
The indentures governing the Charter Holdings notes will not permit Charter Holdings to make
distributions to Charter Communications Holding Company or to Charter Communications, Inc. so that
Charter Communications, Inc. can pay interest or principal on the convertible senior notes, unless Charter
Holdings can meet a leverage ratio of 8.75 to 1.0, and there is no default under the Charter Holdings
indentures. Charter Holdings did not meet that leverage ratio for the quarter ended December 31, 2002. The
CC V and the Renaissance indentures also impose restrictions on the ability of CC V Holdings and
Renaissance, respectively, to make distributions to Charter Holdings to make payments on the Charter
Holdings notes. The indentures governing the Charter Holdings notes do permit Charter Holdings and its
subsidiaries to make payments to Charter Communications Holding Company to the extent of its outstanding
unsubordinated intercompany debt to Charter Communications Holding Company, which had an aggregate
principal amount of approximately $73 million as of December 31, 2002. That amount is only suÇcient to
enable Charter Communications, Inc. to make interest payments on its convertible senior notes through
December, 2003, and is not suÇcient to enable Charter Communications, Inc. to make interest payments
beginning in April, 2004 or to repay all or any portion of its convertible senior notes at maturity. See
""Ì Certain Trends and Uncertainties Ì Restrictive Covenants.''
Funding Commitment of Vulcan Inc.
In February 2003, we received a proposal from Paul Allen, Chairman of our board of directors, oÅering to
provide a backup credit facility of up to $300 million to certain of our subsidiaries to provide assistance in
ensuring that we had suÇcient liquidity to meet certain leverage ratio covenants under existing credit facilities.
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