Charter 2003 Annual Report Download - page 82

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The limitations on incurrence of debt contained in the indenture governing the Renaissance notes permit
Renaissance Media Group and its restricted subsidiaries to incur additional debt, so long as they are not in
default under the indenture:
‚ if, after giving eÅect to the incurrence, Renaissance Media Group could meet a leverage ratio (ratio of
consolidated debt to four times consolidated EBITDA, as deÑned, from the most recent quarter) of
6.75 to 1.0, and, regardless of whether the leverage ratio could be met,
‚ up to the greater of $200 million or 4.5 times Renaissance Media Group's consolidated annualized
EBITDA, as deÑned,
‚ up to an amount equal to 5% of Renaissance Media Group's consolidated total assets to Ñnance the
purchase of new assets,
‚ up to two times the sum of (a) the net cash proceeds of new equity issuances and capital contributions,
and (b) 80% of the fair market value of property received by Renaissance Media Group or an issuer as
a capital contribution, in each case received after the issue date of the Renaissance notes and not
allocated to make restricted payments, 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 Renaissance notes permits us to incur debt under one of the categories
above, and reclassify the debt into a diÅerent category.
‚ Under the indenture governing the Renaissance notes, Renaissance Media Group and its restricted
subsidiaries are permitted to pay dividends on equity interests, repurchase interests, make restricted
investments, or make other speciÑed restricted payments only if Renaissance Media Group could incur
$1.00 of additional debt under the debt incurrence test, which requires that Renaissance Media Group
meet the 6.75 to 1.0 leverage ratio after giving eÅect to the transaction of the indebtedness covenant
and that no default exists or would occur as a consequence thereof. If those conditions are met,
Renaissance Media Group and its restricted subsidiaries are permitted to make restricted payments in
a total amount not to exceed the result of 100% of Renaissance Media Group's consolidated EBITDA,
as deÑned, minus 130% of its consolidated interest expense, plus 100% of new cash equity proceeds
received by Renaissance Media Group and not allocated to the indebtedness covenant, plus returns on
certain investments, all cumulatively from June 1998. Renaissance Media Group and its restricted
subsidiaries may make permitted investments up to $2 million in related businesses and other speciÑed
permitted investments, restricted payments up to $10 million, dividends up to 6% each year of the net
cash proceeds of public equity oÅerings, and other speciÑed restricted payments without meeting the
foregoing test.
‚ Renaissance Media Group and its restricted subsidiaries are not permitted to grant liens on their assets
other than speciÑed permitted liens, unless corresponding liens are granted to secure the Renaissance
notes. Permitted liens include liens securing debt permitted to be incurred under credit facilities, liens
securing debt incurred under the incurrence of indebtedness test, in amounts up to the greater of
$200 million or 4.5 times Renaissance Media Group's consolidated EBITDA, as deÑned, liens as
deposits for acquisitions up to 10% of the estimated purchase price, liens securing permitted Ñnancings
of new assets, liens securing debt permitted to be incurred by restricted subsidiaries, and speciÑed liens
incurred in the ordinary course of business.
‚ Renaissance Media Group and the issuers of the Renaissance notes 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 their consolidated net worth after any such transaction would be no greater than their
consolidated net worth immediately prior to the transaction, or unless Renaissance Media Group could
incur $1.00 of additional debt under the debt incurrence test, which would require them to meet a
leverage ratio of 6.75 to 1.00 after giving eÅect to the transaction.
80