Charter 2004 Annual Report Download - page 68

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
subsidiaries to enter into certain transactions with affiliates (up to an amount equal to 5% of Renaissance Media
involving over $2.5 million without a determination by the Group’s consolidated total assets to finance the purchase of
board of directors that the transaction is on terms no less new assets,
favorable than arms length, or transactions with affiliates (up to two times the sum of (a) the net cash proceeds of
involving consideration in excess of $10 million with affiliates new equity issuances and capital contributions, and (b) 80%
without receiving an independent opinion as to the fairness of of the fair market value of property received by Renaissance
the transaction to the holders of the CC V Holdings notes. Media Group or an issuer as a capital contribution, in each
case received after the issue date of the Renaissance notes
Renaissance Media Notes
and not allocated to make restricted payments, and
The 10% senior discount notes due 2008 were issued by
(other items of indebtedness for specific purposes such as
Renaissance Media (Louisiana) LLC, Renaissance Media (Ten-
intercompany debt, refinancing of existing debt and interest
nessee) LLC and Renaissance Media Holdings Capital Corpora-
rate swaps to provide protection against fluctuation in
tion, with Renaissance Media Group LLC as guarantor and the
interest rates.
United States Trust Company of New York as trustee. Renais-
The indenture governing the Renaissance notes permits us
sance Media Group LLC, which is the direct or indirect parent
to incur debt under one of the categories above, and reclassify
company of these issuers, is now a subsidiary of Charter
the debt into a different category.
Operating. The Renaissance 10% notes and the Renaissance
Under the indenture governing the Renaissance notes,
guarantee are unsecured, unsubordinated debt of the issuers and
Renaissance Media Group and its restricted subsidiaries are
the guarantor, respectively. In October 1998, the issuers of the
permitted to pay dividends on equity interests, repurchase
Renaissance notes exchanged $163 million of the original issued
interests, make restricted investments, or make other specified
and outstanding Renaissance notes for an equivalent value of
restricted payments only if Renaissance Media Group could
new Renaissance notes. The form and terms of the new
incur $1.00 of additional debt under the debt incurrence test,
Renaissance notes are the same in all material respects as the
which requires that Renaissance Media Group meet the 6.75 to
form and terms of the original Renaissance notes except that the
1.0 leverage ratio after giving effect to the transaction of the
issuance of the new Renaissance notes was registered under the
indebtedness covenant and that no default exists or would occur
Securities Act.
as a consequence thereof. If those conditions are met, Renais-
There was no payment of any interest in respect of the
sance Media Group and its restricted subsidiaries are permitted
Renaissance notes prior to October 15, 2003. Since October 15,
to make restricted payments in a total amount not to exceed the
2003, interest on the Renaissance notes is payable semi-annually
result of 100% of Renaissance Media Group’s consolidated
in arrears in cash at a rate of 10% per year. On April 15, 2003,
EBITDA, as defined, minus 130% of its consolidated interest
the Renaissance notes became redeemable at the option of the
expense, plus 100% of new cash equity proceeds received by
issuers thereof, in whole or in part, initially at 105% of their
Renaissance Media Group and not allocated to the indebtedness
principal amount at maturity, plus accrued interest, declining to
covenant, plus returns on certain investments, all cumulatively
100% of the principal amount at maturity, plus accrued interest,
from June 1998. Renaissance Media Group and its restricted
on or after April 15, 2006.
subsidiaries may make permitted investments up to $2 million in
Our acquisition of Renaissance triggered change of control
related businesses and other specified permitted investments,
provisions of the Renaissance notes that required us to offer to
restricted payments up to $10 million, dividends up to 6% each
purchase the Renaissance notes at a purchase price equal to
year of the net cash proceeds of public equity offerings, and
101% of their accreted value on the date of the purchase, plus
other specified restricted payments without meeting the forego-
accrued interest, if any. In May 1999, we made an offer to
ing test.
repurchase the Renaissance notes, and holders of Renaissance
Renaissance Media Group and its restricted subsidiaries are
notes representing 30% of the total principal amount outstand-
not permitted to grant liens on their assets other than specified
ing at maturity tendered their Renaissance notes for repurchase.
permitted liens, unless corresponding liens are granted to secure
The limitations on incurrence of debt contained in the
the Renaissance notes. Permitted liens include liens securing
indenture governing the Renaissance notes permit Renaissance
debt permitted to be incurred under credit facilities, liens
Media Group and its restricted subsidiaries to incur additional
securing debt incurred under the incurrence of indebtedness test,
debt, so long as they are not in default under the indenture:
in amounts up to the greater of $200 million or 4.5 times
(if, after giving effect to the incurrence, Renaissance Media Renaissance Media Group’s consolidated EBITDA, as defined,
Group could meet a leverage ratio (ratio of consolidated liens as deposits for acquisitions up to 10% of the estimated
debt to four times consolidated EBITDA, as defined, from purchase price, liens securing permitted financings of new assets,
the most recent quarter) of 6.75 to 1.0, and, regardless of liens securing debt permitted to be incurred by restricted
whether the leverage ratio could be met, subsidiaries, and specified liens incurred in the ordinary course
(up to the greater of $200 million or 4.5 times Renaissance of business.
Media Group’s consolidated annualized EBITDA, as Renaissance Media Group and the issuers of the Renais-
defined, sance notes are generally not permitted to sell or otherwise
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