Charter 2003 Annual Report Download - page 80

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Avalon notes redeemed, plus accrued and unpaid interest, if any, for redemptions on or after December 1,
2006.
The limitations on incurrence of debt contained in the indenture governing the CC V notes permit the
CC V issuers and their restricted subsidiaries to incur additional debt or issue shares of preferred stock, so long
as we are not in default under the CC V indenture:
‚ if, after giving eÅect to the incurrence, the CC V issuers could meet a leverage ratio (ratio of
consolidated debt to four times consolidated cash Öow from the most recent quarter) of 6.5 to 1.0, and,
regardless of whether the leverage ratio could be met,
‚ up to approximately $346 million of debt under a credit facility,
‚ up to $10 million of debt incurred to Ñnance the purchase of new assets,
‚ up to $15 million of additional debt, and
‚ other items of indebtedness for speciÑc purposes such as intercompany debt, reÑnancing of existing
debt and interest rate swaps to provide protection against Öuctuation in interest rates.
The indenture governing the CC V notes permits the CC V issuers to incur debt under one of the
categories above, and reclassify the debt into a diÅerent category. The CC VIII, LLC credit agreement
generally imposes more restrictive limitations on incurring new debt, so CC VIII Operating and its
subsidiaries are not permitted to utilize the full debt incurrence capability provided by the indenture covenants
provided for in the CC V notes.
‚ Under the indenture governing the CC V notes, the CC V issuers and their restricted subsidiaries are
permitted to pay dividends on equity interests, repurchase interests, make restricted investments, or
make other speciÑed restricted payments only if CC V could, after giving eÅect thereto, incur $1.00 of
additional debt under the leverage ratio test, which would require that the CC V issuers meet the 6.5 to
1.0 leverage ratio of the indebtedness covenant and no default would exist or result as a consequence
thereof. If those conditions are met, the CC V issuers and their restricted subsidiaries are permitted to
make restricted payments in a total amount not to exceed the result of 100% of the CC V issuers'
consolidated cash Öow, minus 1.4 times their consolidated interest expense, plus 100% of new equity
proceeds received by the CC V issuers, plus returns on certain investments, all cumulatively from
January 1, 1999. The CC V issuers and their restricted subsidiaries may make permitted investments
up to $10 million and other speciÑed permitted investments, restricted payments up to $5 million, and
other speciÑed restricted payments without meeting the foregoing test.
‚ The CC V issuers and their restricted subsidiaries are not permitted to grant liens on their assets other
than speciÑed permitted liens. Permitted liens include liens securing debt permitted by the covenant
limiting incurrence of debt, liens securing amounts up to the greater of $15 million or 5% of total assets,
certain existing liens and speciÑed liens incurred in the ordinary course of business.
‚ The CC V issuers are generally not permitted to sell or otherwise dispose of all or substantially all of
their assets or merge with or into other companies unless the CC V issuers and their subsidiaries could
incur $1.00 of additional debt under the leverage ratio test described above, after giving eÅect to the
transaction.
‚ The CC V issuers and their subsidiaries may generally not otherwise sell assets or, in the case of
restricted subsidiaries, equity interests, unless they receive consideration at least equal to the fair
market value of the assets or equity interests, with at least 75% of the consideration for such sale
consisting of a controlling interest in a permitted business or assets useful in a permitted business or
cash, assumption of liabilities or securities promptly converted into cash. The CC V issuers and their
restricted subsidiaries are then required within 360 days after any asset sale either to commit to use the
net cash proceeds over a speciÑed threshold either to acquire assets, including controlling assets in
permitted businesses, make capital expenditures or use the net cash proceeds to repay debt, or to oÅer
to repurchase the CC V notes with any remaining proceeds.
78