Charter 2003 Annual Report Download - page 79

CCO Holdings and its restricted subsidiaries may generally not engage in sale and leaseback transactions
unless, at the time of the transaction, CCO Holdings could have incurred secured indebtedness in an amount
equal to the present value of the net rental payments to be made under the lease, and the sale of the assets and
application of proceeds is permitted by the covenant restricting asset sales.
CCO Holdings' restricted subsidiaries may generally not enter into restrictions on their ability to make
dividends or distributions or transfer assets to CCO Holdings on terms that are materially more restrictive
than those governing their debt, lien, asset sale, lease and similar agreements existing when they entered into
the indentures, unless those restrictions are on customary terms that will not materially impair CCO Holdings'
ability to repay the high-yield notes.
The restricted subsidiaries of CCO Holdings are generally not permitted to guarantee or pledge assets to
secure debt of CCO Holdings, unless the guarantying subsidiary issues a guarantee of the notes of comparable
priority and tenor, and waives any rights of reimbursement, indemnity or subrogation arising from the
guarantee transaction for at least one year.
The indenture also restricts the ability of CCO Holdings and its restricted subsidiaries to enter into
certain transactions with aÇliates involving consideration in excess of $15 million without a determination by
the board of directors that the transaction is on terms no less favorable than arms length, or transactions with
aÇliates involving over $50 million without receiving an independent opinion as to the fairness of the
transaction to the holders of the CCO Holdings notes.
CC V Holdings Notes
On December 10, 1998, CC V Holdings, LLC, formerly known as Avalon Cable LLC, and CC V
Holdings Finance, Inc. (formerly Avalon Cable Holdings Finance, Inc.) jointly issued $196.0 million total
principal amount at maturity of 11.875% senior discount notes due 2008. On July 22, 1999, the issuers
exchanged $196.0 million of the original issued and outstanding Avalon notes for an equivalent amount of new
Avalon notes. The form and terms of the new Avalon notes are substantially identical to the original Avalon
notes except that they are registered under the Securities Act and, therefore, are not subject to the same
transfer restrictions.
The Avalon notes are guaranteed by certain subsidiaries of CC V Holdings.
In the event of speciÑed change of control events, holders of the Avalon notes have the right to sell their
Avalon notes to the issuers of the Avalon notes at 101% of the total principal amount of the Avalon notes, plus
accrued and unpaid interest, if any, to the date of purchase.
Our acquisition of Avalon triggered this right. In January 2000, we completed change of control oÅers in
which we repurchased $16.3 million total accreted value of the 11.875% notes at a purchase price of 101% of
accreted value as of January 28, 2000. The repurchase price of $11 million was funded with proceeds of the
sale of the January 2000 Charter Holdings notes.
On December 1, 2003, the issuers redeemed at par value an amount equal to $369.79 per $1,000 in
principal amount at maturity of each senior discount note then outstanding. Based on the amount outstanding
on December 1, 2003, the redemption amount was $67 million.
There were no current payments of cash interest on the Avalon notes before December 1, 2003. The
Avalon notes accreted in value at a rate of 11.875% per year, compounded semi-annually, to a total principal
amount of $180 million on December 1, 2003. At December 31, 2003, after principal repayments in the fourth
quarter of 2003, the total principal amount outstanding was $113 million. Since December 1, 2003, cash
interest on the Avalon notes:
‚ accrues at the rate of 11.875% per year on the principal amount at maturity; and
‚ is payable semi-annually in arrears on June 1 and December 1 of each year, commencing June 1, 2004.
After December 1, 2003, the issuers of the Avalon notes may redeem the Avalon notes, in whole or in
part, at a speciÑed premium. The optional redemption price declines to 100% of the principal amount of the
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