Charter 2004 Annual Report Download - page 59

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
and later reclassify that debt into another category. The Charter our subsidiaries’ credit facilities, liens securing the purchase price
Operating credit facilities generally impose more restrictive of new assets, other liens securing indebtedness up to $50 mil-
limitations on incurring new debt than Charter Holdings’ lion and specified liens incurred in the ordinary course of
indentures, so our subsidiaries that are subject to the Charter business. The lien covenant does not restrict liens on assets of
Operating credit agreements may not be permitted to utilize the subsidiaries of Charter Holdings.
full debt incurrence that would otherwise be available under the Charter Holdings and Charter Capital, its co-issuer, are
Charter Holdings indenture covenants. generally not permitted to sell all or substantially all of their
Generally, under Charter Holdings’ high-yield indentures: assets or merge with or into other companies unless their
leverage ratio after any such transaction would be no greater
(Charter Holdings and its restricted subsidiaries are generally than their leverage ratio immediately prior to the transaction, or
permitted to pay dividends on equity interests, repurchase unless Charter Holdings Leverage Ratio would be below 8.75 to
interests, or make other specified restricted payments only if, 1.0, no default exists, and the surviving entity is a U.S. entity
after giving effect to the transaction, the Charter Holdings that assumes the Charter Holdings notes.
Leverage Ratio would be below 8.75 to 1.0 and if no default Charter Holdings and its restricted subsidiaries may gener-
exists or would exist as a consequence of such incurrence. If ally not otherwise sell assets or, in the case of restricted
those conditions are met, restricted payments in a total subsidiaries, issue equity interests, unless they receive considera-
amount of up to 100% of Charter Holding’s consolidated tion at least equal to the fair market value of the assets or equity
EBITDA, as defined, minus 1.2 times its consolidated interest interests, consisting of at least 75% in cash, assumption of
expense, plus 100% of new cash and non-cash equity proceeds liabilities, securities converted into cash within 60 days or
received by Charter Holdings and not allocated to the debt productive assets. Charter Holdings and its restricted subsidiaries
incurrence covenant or to permitted investments, all cumula- are then required within 365 days after any asset sale either to
tively from March 1999, the date of the first Charter Holdings commit to use the net cash proceeds over a specified threshold
indenture, plus $100 million. to acquire assets, including current assets, used or useful in their
In addition, Charter Holdings may make distributions or businesses or use the net cash proceeds to repay debt, or to
restricted payments, so long as no default exists or would be offer to repurchase the Charter Holdings notes with any
caused by transactions: remaining proceeds.
(to repurchase management equity interests in amounts not Charter Holdings and its restricted subsidiaries may gener-
to exceed $10 million per fiscal year, ally not engage in sale and leaseback transactions unless, at the
time of the transaction, Charter Holdings could have incurred
(regardless of the existence of any default, to pay pass- secured indebtedness in an amount equal to the present value of
through tax liabilities in respect of ownership of equity the net rental payments to be made under the lease, and the
interests in Charter Holdings or its restricted subsidiaries, or sale of the assets and application of proceeds is permitted by the
(to make other specified restricted payments including covenant restricting asset sales.
merger fees up to 1.25% of the transaction value, repur-
chases using concurrent new issuances, and certain divi-
dends on existing subsidiary preferred equity interests.
Charter Holdings and its restricted subsidiaries may not
make investments except permitted investments if there is a
default under the indentures or if, after giving effect to the
transaction, the Charter Holdings Leverage Ratio would be
below 8.75 to 1.0.
Permitted investments include:
(investments by Charter Holdings in restricted subsidiaries
or by restricted subsidiaries in Charter Holdings,
(investments in productive assets (including through equity
investments) aggregating up to $150 million since March
1999,
(investments aggregating up to 100% of new cash equity
proceeds received by Charter Holdings since March 1999
and not allocated to the debt incurrence or restricted
payments covenant, and
(other investments up to $50 million since March 1999.
Charter Holdings is not permitted to grant liens on its
assets other than specified permitted liens. Permitted liens
include liens securing debt and other obligations incurred under
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