Charter 2005 Annual Report Download - page 137

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2005 FORM 10-K
Notes to Consolidated Financial Statements (continued)
incurrence of debt by Charter and its subsidiaries, with certain Charter Operating credit facilities. The redemption resulted in a
exceptions, and (ii) certain asset sales (to the extent not used for loss on extinguishment of debt for the year ended December 31,
other purposes permitted under the bridge loan). 2005 of approximately $5 million. Following such redemption,
In August 2005, CCO Holdings issued $300 million in debt CC V Holdings, LLC and its subsidiaries (other than non-
securities, the proceeds of which were used for general guarantor subsidiaries) guaranteed the Charter Operating credit
corporate purposes, including the payment of distributions to its facilities and granted a lien on all of their assets as to which a
parent companies, including Charter Holdings, to pay interest lien can be perfected under the Uniform Commercial Code by
expense. the filing of a financing statement.
On November 22, 2004, the Company issued $862.5 million
Gain on Extinguishment of Debt original principal amount of 5.875% convertible senior notes due
In September 2005, Charter Holdings and its wholly owned 2009, which are convertible into shares of Charter’s Class A
subsidiaries, CCH I and CIH, completed the exchange of common stock, par value $.001 per share, at a rate of
approximately $6.8 billion total principal amount of outstanding 413.2231 shares per $1,000 principal amount of notes (or
debt securities of Charter Holdings in a private placement for approximately $2.42 per share), subject to adjustment in certain
new debt securities. Holders of Charter Holdings notes due in circumstances. On December 23, 2004, the Company used a
2009 and 2010 exchanged $3.4 billion principal amount of notes portion of the proceeds from the sale of the notes to redeem all
for $2.9 billion principal amount of new 11% CCH I senior of its outstanding 5.75% convertible senior notes due 2005 (total
secured notes due 2015. Holders of Charter Holdings notes due principal amount of $588 million). The redemption resulted in a
2011 and 2012 exchanged $845 million principal amount of loss on extinguishment of debt of $10 million for the year ended
notes for $662 million principal amount of 11% CCH I notes December 31, 2004.
due 2015. In addition, holders of Charter Holdings notes due In April 2004, Charter’s indirect subsidiaries, Charter
2011 and 2012 exchanged $2.5 billion principal amount of notes Operating and Charter Communications Operating Capital
for $2.5 billion principal amount of various series of new CIH Corp., sold $1.5 billion of senior second-lien notes in a private
notes. Each series of new CIH notes has the same interest rate transaction. Additionally, Charter Operating amended and
and provisions for payment of cash interest as the series of old restated its $5.1 billion credit facilities, among other things, to
Charter Holdings notes for which such CIH notes were defer maturities and increase availability under those facilities to
exchanged. In addition, the maturities for each series were approximately $6.5 billion, consisting of a $1.5 billion six-year
extended three years. The exchanges resulted in a net gain on revolving credit facility, a $2.0 billion six-year term loan facility
extinguishment of debt of approximately $490 million for the and a $3.0 billion seven-year term loan facility. Charter
year ended December 31, 2005. Operating used the additional borrowings under the amended
In March and June 2005, Charter Operating consummated and restated credit facilities, together with proceeds from the
exchange transactions with a small number of institutional sale of the Charter Operating senior second-lien notes to
holders of Charter Holdings 8.25% senior notes due 2007 refinance the credit facilities of its subsidiaries, CC VI Operating
pursuant to which Charter Operating issued, in private place- Company, LLC (‘‘CC VI Operating’’), Falcon Cable Communi-
ments, approximately $333 million principal amount of new cations, LLC (‘‘Falcon Cable’’), and CC VIII Operating, LLC
notes with terms identical to Charter Operating’s 8.375% senior (‘‘CC VIII Operating’’), all in concurrent transactions. In addi-
second lien notes due 2014 in exchange for approximately tion, Charter Operating was substituted as the lender in place of
$346 million of the Charter Holdings 8.25% senior notes due the banks under those subsidiaries’ credit facilities. These
2007. The exchanges resulted in a net gain on extinguishment of transactions resulted in a net loss on extinguishment of debt of
debt of approximately $10 million for the year ended Decem- $21 million for the year ended December 31, 2004.
ber 31, 2005. The Charter Holdings notes received in the The Company recognized a loss of approximately $23 mil-
exchange were thereafter distributed to Charter Holdings and lion recorded as loss on debt to equity conversion on the
cancelled. accompanying consolidated statement of operations for the year
During the year ended December 31, 2005, the Company ended December 31, 2004 from privately negotiated exchanges
repurchased, in private transactions, from a small number of of a total of $30 million principal amount of Charter’s
institutional holders, a total of $136 million principal amount of 5.75% convertible senior notes for shares of Charter Class A
its 4.75% convertible senior notes due 2006. These transactions common stock. The exchanges resulted in the issuance of more
resulted in a net gain on extinguishment of debt of approxi- shares in the exchange transaction than would have been
mately $3 million for the year ended December 31, 2005. issuable under the original terms of the convertible senior notes.
In March 2005, Charter’s subsidiary, CC V Holdings, LLC, In September 2003, Charter, Charter Holdings and their
redeemed all of its 11.875% notes due 2008, at 103.958% of indirect subsidiary, CCH II purchased, in a non-monetary
principal amount, plus accrued and unpaid interest to the date transaction, a total of approximately $609 million principal
of redemption. The total cost of redemption was approximately amount of Charter’s outstanding convertible senior notes and
$122 million and was funded through borrowings under the approximately $1.3 billion principal amount of the senior notes
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