Charter 2004 Annual Report Download - page 67

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
principal amount outstanding was $113 million. Since Decem- securing amounts up to the greater of $15 million or 5% of total
ber 1, 2003, cash interest on the Avalon notes: assets, certain existing liens and specified liens incurred in the
ordinary course of business.
(accrues at the rate of 11.875% per year on the principal The CC V Issuers are generally not permitted to sell or
amount at maturity; and otherwise dispose of all or substantially all of their assets or
(is payable semi-annually in arrears on June 1 and Decem- merge with or into other companies unless the CC V Issuers
ber 1 of each year, commencing June 1, 2004. and their subsidiaries could incur $1.00 of additional debt under
the leverage ratio test described above, after giving effect to the
The limitations on incurrence of debt contained in the transaction.
indenture governing the CC V Holdings notes permit the CC V The CC V Issuers and their subsidiaries may generally not
Issuers and their restricted subsidiaries to incur additional debt otherwise sell assets or, in the case of restricted subsidiaries,
or issue shares of preferred stock, so long as we are not in equity interests, unless they receive consideration at least equal
default under the CC V Holdings indenture: to the fair market value of the assets or equity interests, with at
least 75% of the consideration for such sale consisting of a
(if, after giving effect to the incurrence, the CC V Issuers
controlling interest in a permitted business or assets useful in a
could meet a leverage ratio (ratio of consolidated debt to
permitted business or cash, assumption of liabilities or securities
four times consolidated cash flow from the most recent
promptly converted into cash. The CC V Issuers and their
quarter) of 6.5 to 1.0, and, regardless of whether the
restricted subsidiaries are then required within 360 days after
leverage ratio could be met,
any asset sale either to commit to use the net cash proceeds
(up to approximately $346 million of debt under a credit over a specified threshold either to acquire assets, including
facility, controlling assets in permitted businesses, make capital expendi-
(up to $10 million of debt incurred to finance the purchase tures or use the net cash proceeds to repay debt, or to offer to
of new assets, repurchase the CC V Holdings notes with any remaining
proceeds.
(up to $15 million of additional debt, and The CC V Issuers and their restricted subsidiaries may not
(other items of indebtedness for specific purposes such as engage in sale and leaseback transactions unless, at the time of
intercompany debt, refinancing of existing debt and interest the transaction, the applicable CC V Issuer or restricted
rate swaps to provide protection against fluctuation in subsidiary could have incurred indebtedness under the leverage
interest rates. ratio test described above in an amount equal to the present
The indenture governing the CC V Holdings notes permits value of the net rental payments to be made under the lease, the
the CC V Issuers to incur debt under one of the categories gross proceeds of the sale are at least equal to the fair market
above, and reclassify the debt into a different category. value of the subject property, and the sale of the assets and
Under the indenture governing the CC V Holdings notes, application of proceeds is permitted by the covenant restricting
the CC V Issuers and their restricted subsidiaries are permitted asset sales.
to pay dividends on equity interests, repurchase interests, make The CC V Issuers’ restricted subsidiaries may not enter into
restricted investments, or make other specified restricted pay- restrictions on their abilities to make dividends or distributions
ments only if CC V Holdings could, after giving effect thereto, or transfer assets to the CC V Issuers except under documents
incur $1.00 of additional debt under the leverage ratio test, governing debt, asset sales, leases and like transactions permitted
which would require that the CC V Issuers meet the 6.5 to 1.0 by the indenture.
leverage ratio of the indebtedness covenant and no default The restricted subsidiaries of the CC V Issuers are generally
would exist or result as a consequence thereof. If those not permitted to guarantee or pledge assets to secure debt of
conditions are met, the CC V Issuers and their restricted the CC V Issuers, unless the guarantying subsidiary issues a
subsidiaries are permitted to make restricted payments in a total guarantee of the CC V Holdings notes, and waives any rights of
amount not to exceed the result of 100% of the CC V Issuers’ reimbursement, indemnity or subrogation arising from the
consolidated cash flow, minus 1.4 times their consolidated guarantee transaction.
interest expense, plus 100% of new equity proceeds received by The CC V Issuers and their restricted subsidiaries are
the CC V Issuers, plus returns on certain investments, all generally not permitted to transfer equity interests in restricted
cumulatively from January 1, 1999. The CC V Issuers and their subsidiaries unless the transfer is of all of the equity interests in
restricted subsidiaries may make permitted investments up to the restricted subsidiary or the restricted subsidiary remains a
$10 million and other specified permitted investments, restricted restricted subsidiary and net proceeds of the equity sale are
payments up to $5 million, and other specified restricted applied in accordance with the asset sales covenant. Restricted
payments without meeting the foregoing test. subsidiaries of the CC V Issuers are not permitted to issue
The CC V Issuers and their restricted subsidiaries are not equity interests if as a result, the issuing subsidiary would no
permitted to grant liens on their assets other than specified longer be a restricted subsidiary.
permitted liens. Permitted liens include liens securing debt The indenture governing the CC V Holdings notes also
permitted by the covenant limiting incurrence of debt, liens restricts the ability of the CC V Issuers and their restricted
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