Charter 2004 Annual Report Download - page 56

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
subject to applicable limitations of the NASDAQ stock market. declared effective on or before April 1, 2005. In the event we fail
Holders who convert their notes prior to November 16, 2007 to meet our obligations with respect to registration statements
will receive an early conversion make whole amount in respect becoming effective on or prior to the date specified, liquidated
of their notes based on a proportional share of the portfolio of damages will accrue in respect of the notes. Charter may elect
pledged securities described below, with specified adjustments. to accrete the principal amount of the notes in lieu of paying
No holder of notes will be entitled to receive shares of our cash for any liquidated damages that accrue, and may also elect
Class A common stock on conversion to the extent that receipt to defer any interest accruing for any accreted portion exceeding
of the shares would cause the converting holder to become, the original principal amount of the notes. We will pay no
directly or indirectly, a ‘‘beneficial holder’’ (within the meaning interest on any such deferred interest.
of Section 13(d) of the Exchange Act and the rules and Following the earlier of the sale of the notes pursuant to an
regulations promulgated thereunder) of more than 4.9% of the effective registration statement or the date two years following
outstanding shares of our Class A common stock if such the issue date, we may redeem the notes in whole or in part for
conversion would take place prior to November 16, 2008, or cash at any time at a redemption price equal to 100% of the
more than 9.9% thereafter. aggregate principal amount plus accrued and unpaid interest,
If a holder tenders a note for conversion, we may direct deferred interest and liquidated damages, if any, but only if for
that holder (unless we have called those notes for redemption) any 20 trading days in any 30 consecutive trading day period
to a financial institution designated by us to conduct a the closing price has exceeded 180% of the conversion price, if
transaction with that institution, on substantially the same terms such 30 trading day period begins prior to November 16, 2007
that the holder would have received on conversion. But if any or 150% of the conversion price, if such 30 trading period
such financial institution does not accept such notes or does not begins thereafter. Holders who convert notes that we have
deliver the required conversion consideration, we remain obli- called for redemption shall receive, in addition to the early
gated to convert the notes. conversion make whole amount, if applicable, the present value
Charter Holdco used a portion of the proceeds from the of the interest on the notes converted that would have been
sale of the notes to purchase a portfolio of U.S. government payable for the period from the later of November 17, 2007 and
securities in an amount which we believe will be sufficient to the redemption date through the scheduled maturity date for
make the first six interest payments on the notes. These the notes, plus any accrued deferred interest.
government securities were pledged to us as security for a Charter Communications Holdings, LLC Notes
mirror note issued by Charter Holdco to Charter and pledged
to the trustee under the indenture governing the notes as March 1999 Charter Holdings Notes
security for our obligations thereunder. We expect to use such The March 1999 Charter Holdings notes were issued under
securities to fund the first six interest payments under the notes. three separate indentures, each dated as of March 17, 1999,
The pledged securities totaled $144 million at December 31, among Charter Holdings and Charter Capital, as the issuers, and
2004. Any holder that converts its notes prior to the third BNY Midwest Trust Company, as trustee. Charter Holdings and
anniversary of the issue date will be entitled to receive, in Charter Capital exchanged these notes for new notes with
addition to the requisite number of shares upon conversion, an substantially similar terms, except that the new notes are
interest make whole payment equal to the cash proceeds from registered under the Securities Act.
the sale by the trustee of that portion of the remaining pledged The March 1999 Charter Holdings notes are general
U.S. government securities which secure interest payments on unsecured obligations of Charter Holdings and Charter Capital.
the notes so converted, subject to certain limitations with Cash interest on the March 1999 9.920% Charter Holdings
respect to notes that have not been sold pursuant to an effective notes began to accrue on April 1, 2004.
registration statement under the Securities Act of 1933. The March 1999 Charter Holdings notes are senior debt
Upon a change of control and certain other fundamental obligations of Charter Holdings and Charter Capital. They rank
changes, subject to certain conditions and restrictions, Charter equally with all other current and future unsubordinated
may be required to repurchase the notes, in whole or in part, at obligations of Charter Holdings and Charter Capital. They are
100% of their principal amount plus accrued interest at the structurally subordinated to the obligations of Charter Holdings’
repurchase date. subsidiaries, including the CCH II notes, the CCO Holdings
We have filed a shelf registration statement for resale of the notes, the Renaissance notes, the CC V Holdings notes, the
notes and shares issuable on conversion of the notes by the Charter Operating credit facilities and the Charter Operating
holders, and we are required to use our reasonable best efforts notes.
to cause that registration statement to be declared effective on Charter Holdings and Charter Capital will not have the
or before April 21, 2005. We have also filed a registration right to redeem the March 1999 8.250% Charter Holdings notes
statement for use by Citigroup Global Markets Inc. to sell up to prior to their maturity on April 1, 2007. On or after April 1,
150 million shares of our Class A common stock that we will 2004, Charter Holdings and Charter Capital may redeem some
loan to an affiliate of Citigroup Global Markets, Inc. pursuant to or all of the March 1999 8.625% Charter Holdings notes and
a share lending agreement, and we are obligated to use our the March 1999 9.920% Charter Holdings notes at any time, in
reasonable best efforts to have such registration statement each case, at a premium. The optional redemption price declines
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