Charter 2004 Annual Report Download - page 66

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
(all intercompany obligations owing to Charter Operating In the event that additional liens are granted by Charter
including, but not limited to, intercompany notes from Operating or its subsidiaries to secure obligations under the
CC VI Operating, CC VIII Operating and Falcon, which Charter Operating credit facilities or the related obligations,
notes are supported by the same guarantees and collateral second-priority liens on the same assets will be granted to
that supported these subsidiaries’ credit facilities prior to secure the Charter Operating notes, which liens will be subject
the amendment and restatement of the Charter Operating to the provisions of an intercreditor agreement. Notwithstanding
credit facilities. the foregoing sentence, no such second-priority liens need be
On and after the guarantee and pledge date, the collateral provided if the time such liens would otherwise be granted is
for the Charter Operating notes will consist of all of Charter not during a guarantee and pledge availability period (when the
Operating’s and its subsidiaries’ assets that secure the obligations Leverage Condition is satisfied), but such second-priority liens
of Charter Operating or any subsidiary of Charter Operating will be required to be provided in accordance with the foregoing
with respect to the Charter Operating credit facility and the sentence on or prior to the fifth business day of the commence-
related obligations or certain other indebtedness on such date. It ment of the next succeeding guarantee and pledge availability
is currently contemplated that, as of the guarantee and pledge period.
date, such collateral will consist of the capital stock of Charter CC V Holdings, LLC Notes
Operating held by CCO Holdings, all of the intercompany On December 10, 1998, CC V Holdings, LLC, formerly known
obligations owing to CCO Holdings by Charter Operating or as Avalon Cable LLC, and CC V Holdings Finance, Inc.
any subsidiary of Charter Operating, and substantially all of (formerly Avalon Cable Holdings Finance, Inc.) (collectively the
Charter Operating’s and the guarantors’ assets (other than the ‘‘CC V Issuers’’) jointly issued $196.0 million total principal
assets of CCO Holdings) in which security interests may be amount at maturity of 11.875% senior discount notes due 2008.
perfected under the Uniform Commercial Code by filing a On July 22, 1999, the issuers exchanged $196.0 million of the
financing statement (including capital stock and intercompany original issued and outstanding CC V Holdings notes for
obligations), including, but not limited to: substantially identical to the original CC V Holdings notes
(with certain exceptions, all capital stock (limited in the case except that they are registered under the Securities Act.
of capital stock of foreign subsidiaries, if any, to 66% of the The CC V Holdings notes are guaranteed by certain
capital stock of first tier foreign Subsidiaries) held by subsidiaries of CC V Holdings. The Charter Operating credit
Charter Operating or any guarantor; and facilities require us to redeem the CC V Holdings notes within
45 days after the first date that the Charter Holdings leverage
(with certain exceptions, all intercompany obligations owing ratio is less than 8.75 to 1.0. In satisfaction of this requirement,
to Charter Operating or any guarantor. CC V Holdings, LLC has called for redemption all of its
In addition, within a time frame specified under the Charter outstanding notes, at 103.958% of principal amount, plus
Operating credit facility (45 days after Charter Holdings satisfies accrued and unpaid interest to the date of redemption, which is
the Leverage Condition, as defined), Charter Operating will be expected to be March 14, 2005.
required to redeem, or cause to be redeemed, in full the notes In the event of specified change of control events, holders
outstanding under the CC V indenture. CC V Holdings, LLC of the CC V Holdings notes have the right to sell their CC V
has called for redemption all of its outstanding notes, which Holdings notes to the issuers of the CC V Holdings notes at
would satisfy this requirement. See ‘‘— CC V Holdings, LLC 101% of the total principal amount of the CC V Holdings notes,
Notes.’’ Within five business days after the redemption, and plus accrued and unpaid interest, if any, to the date of purchase.
provided that such Leverage Condition remains satisfied, CC V Our acquisition of Avalon triggered this right. In January 2000,
Holdings, LLC and its subsidiaries will be required to guarantee we completed change of control offers in which we repurchased
the Charter Operating credit facility and the related obligations $16.3 million total accreted value of the 11.875% notes at a
and to secure those guarantees with first-priority liens, and to purchase price of 101% of accreted value as of January 28, 2000.
guarantee the notes and to secure the Charter Operating senior On December 1, 2003, the issuers redeemed at par value an
second-lien notes with second-priority liens, on substantially all amount equal to $369.79 per $1,000 in principal amount at
of their assets in which security interests may be perfected maturity of each senior discount note then outstanding. Based
under the Uniform Commercial Code by filing a financing on the amount outstanding on December 1, 2003, the redemp-
statement (including capital stock and intercompany obliga- tion amount was $67 million.
tions). In addition, if Charter Operating or its subsidiaries There were no current payments of cash interest on the
exercise any option to redeem in full the notes outstanding CC V Holdings notes before December 1, 2003. The CC V
under the Renaissance indenture, then, provided that the Holdings notes accreted in value at a rate of 11.875% per year,
Leverage Condition remains satisfied, the Renaissance entities compounded semi-annually, to a total principal amount of
will be required to provide corresponding guarantees of the $180 million on December 1, 2003. At December 31, 2003, after
Charter Operating credit facilities and related obligations and principal repayments in the fourth quarter of 2004, the total
note guarantees and to secure the Charter Operating notes and
the Charter Operating credit facilities and related obligations
with corresponding liens.
56