Charter 2004 Annual Report Download - page 50

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CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
Charter Holdings’ indentures and other specified tests were met. credit facilities or through additional debt or equity financings,
In addition, Charter Holdings met the leverage ratio of 8.75 to we would consider:
1.0 based on December 31, 2004 financial results. As a result, (issuing equity that would significantly dilute existing
distributions from Charter Holdings to Charter or Charter shareholders;
Holdco are not currently restricted. Such distributions will again
(issuing convertible debt or some other securities that may
be restricted, however, if Charter Holdings fails to meet its
have structural or other priority over our existing notes and
leverage ratio test at the time of such event. In the past Charter
may also significantly dilute Charter’s existing shareholders;
Holdings has from time to time failed to meet this leverage ratio
test, and there can be no assurance that Charter Holdings will (further reducing our expenses and capital expenditures,
satisfy this test in the future. which may impair our ability to increase revenue;
During periods when such distributions are restricted, the
(selling assets; or
indentures governing the Charter Holdings notes permit Charter
Holdings and its subsidiaries to make specified investments in (requesting waivers or amendments with respect to our
Charter Holdco or Charter, up to an amount determined by a credit facilities, the availability and terms of which would
formula, as long as there is no default under the indentures. As be subject to market conditions.
of December 31, 2004, Charter Holdco had $106 million in cash If the above strategies are not successful, we could be
on hand and was owed $29 million in intercompany loans from forced to restructure our obligations or seek protection under
its subsidiaries, which were available to pay interest on Charter’s the bankruptcy laws. In addition, if we need to raise additional
4.75% convertible senior notes, which is expected to be capital through the issuance of equity or find it necessary to
approximately $7 million in 2005. In addition, Charter has engage in a recapitalization or other similar transaction, our
$144 million of securities pledged as security for the first six shareholders could suffer significant dilution and our noteholders
interest payments on Charter’s 5.875% convertible senior notes. might not receive principal and interest payments to which they
Our significant amount of debt could negatively affect our are contractually entitled.
ability to access additional capital in the future. No assurances Sale of Assets
can be given that we will not experience liquidity problems if In March 2004, we closed the sale of certain cable systems in
we do not obtain sufficient additional financing on a timely basis Florida, Pennsylvania, Maryland, Delaware and West Virginia to
as our debt becomes due or because of adverse market Atlantic Broadband Finance, LLC. We closed the sale of an
conditions, increased competition or other unfavorable events. If, additional cable system in New York to Atlantic Broadband
at any time, additional capital or borrowing capacity is required Finance, LLC in April 2004. Subject to post-closing contractual
beyond amounts internally generated or available under our adjustments, the total net proceeds from the sale of all of these
systems were approximately $733 million. The proceeds
received to date were used to repay a portion of our credit
facilities.
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