Charter 2004 Annual Report Download - page 54

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
As of December 31, 2004 and 2003, our long-term debt Eurodollar loans of up to 3.00% for the Term A facility and
totaled approximately $19.5 billion and $18.6 billion, respec- revolving credit facility, and up to 3.25% for the Term B facility,
tively. This debt was comprised of approximately $5.5 billion and for base rate loans of up to 2.00% for the Term A facility
and $7.2 billion of credit facility debt, $13.3 billion and and revolving credit facility, and up to 2.25% for the Term B
$11.2 billion principal amount of high-yield notes and $1.0 bil- facility. A quarterly commitment fee of up to .75% is payable on
lion and $774 million principal amount of convertible senior the average daily unborrowed balance of the revolving credit
notes at December 31, 2004 and 2003, respectively. facilities.
As of December 31, 2004 and 2003, the weighted average The obligations of our subsidiaries under the Charter
interest rate on the credit facility debt was approximately 6.8% Operating credit facilities (the ‘‘Obligations’’) are guaranteed by
and 5.4%, the weighted average interest rate on our high-yield Charter Operatings’ immediate parent company, CCO Holdings,
notes was approximately 9.2% and 10.3%, and the weighted and the subsidiaries of Charter Operating, except for immaterial
average interest rate on the convertible senior notes was subsidiaries and subsidiaries precluded from guaranteeing by
approximately 5.7% and 5.5%, respectively, resulting in a reason of the provisions of other indebtedness to which they are
blended weighted average interest rate of 8.8% and 8.2%, subject (the ‘‘non-guarantor subsidiaries, primarily Renaissance
respectively. The interest rate on approximately 83% and 80% of and CCV Holdings and their subsidiaries’’). The Obligations are
the total principal amount of our debt was effectively fixed, also secured by (i) a lien on all of the assets of Charter
including the effects of our interest rate hedge agreements as of Operating and its subsidiaries (other than assets of the non-
December 31, 2004 and 2003, respectively. The fair value of our guarantor subsidiaries), to the extent such lien can be perfected
high-yield notes was $12.2 billion and $9.9 billion at Decem- under the Uniform Commercial Code by the filing of a
ber 31, 2004 and 2003, respectively. The fair value of our financing statement, and (ii) by a pledge by CCO Holdings of
convertible senior notes was $1.1 billion and $732 million at the equity interests owned by it in Charter Operating or any of
December 31, 2004 and 2003, respectively. The fair value of our Charter Operating’s subsidiaries, as well as intercompany obliga-
credit facilities is $5.5 billion and $6.9 billion at December 31, tions owing to it by any of such entities. Upon the Charter
2004 and 2003, respectively. The fair value of high-yield and Holdings Leverage Ratio (as defined in the indenture governing
convertible notes is based on quoted market prices, and the fair the Charter Holdings senior notes and senior discount notes)
value of the credit facilities is based on dealer quotations. being under 8.75 to 1.0, the Charter Operating credit facilities
require that the 11.875% notes due 2008 issued by CC V
Charter Operating Credit Facilities — General Holdings, LLC be redeemed. Because such Leverage Ratio was
determined to be under 8.75 to 1.0 in February 2005, CC V
The Charter Operating credit facilities were amended and Holdings, LLC has called for redemption of such notes with an
restated concurrently with the sale of $1.5 billion senior second- anticipated redemption date of March 14, 2005. Following such
lien notes in April 2004, among other things, to defer maturities redemption and provided the Leverage Ratio of Charter
and increase availability under these facilities and to enable Holdings remains under 8.75 to 1.0, CC V Holdings, LLC and
Charter Operating to acquire the interests of the lenders under its subsidiaries (other than non-guarantor subsidiaries) will
the CC VI Operating, CC VIII Operating and Falcon credit guarantee the Obligations and grant a lien on all of their assets
facilities, thereby consolidating all credit facilities under one as to which a lien can be perfected under the Uniform
amended and restated Charter Operating credit agreement. Commercial Code by the filing of a financing statement.
The Charter Operating credit facilities:
(provide borrowing availability of up to $6.5 billion; and Charter Operating Credit Facilities — Restrictive Covenants
(provide for two term facilities: The Charter Operating credit facilities contain representations
and warranties, and affirmative and negative covenants custom-
(i) a Term A facility with a total principal amount of ary for financings of this type. The financial covenants measure
$2.0 billion, of which 12.5% matures in 2007, 30% performance against standards set for leverage, debt service
matures in 2008, 37.5% matures in 2009 and 20% coverage, and interest coverage, tested as of the end of each
matures in 2010; and quarter. The maximum allowable leverage ratio is 4.25 to 1.0
(ii) a Term B facility with a total principal amount of until maturity, tested as of the end of each quarter beginning
$3.0 billion, which shall be repayable in 27 equal September 30, 2004. Additionally, the Charter Operating credit
quarterly installments aggregating in each loan year to facilities contain provisions requiring mandatory loan prepay-
1% of the original amount of the Term B facility, with ments under specific circumstances, including when significant
the remaining balance due at final maturity in 2011; and amounts of assets are sold and the proceeds are not reinvested
in assets useful in the business of the borrower within a
(provide for a revolving credit facility, in a total amount of
specified period, and upon the incurrence of certain indebted-
$1.5 billion, with a maturity date in 2010.
ness when the ratio of senior first lien debt to operating cash
Amounts outstanding under the Charter Operating credit
flow is greater than 2.0 to 1.0.
facilities bear interest, at Charter Operating’s election, at a base
rate or the Eurodollar rate, as defined, plus a margin for
44