Charter 2005 Annual Report Download - page 144

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2005 FORM 10-K
Notes to Consolidated Financial Statements (continued)
The Charter Operating credit facilities provide borrowing As of December 31, 2005, outstanding borrowings under
availability of up to $6.5 billion as follows: the Charter Operating credit facilities were approximately
$5.7 billion and the unused total potential availability was
(two term facilities: approximately $553 million, none of which was limited by
(i) a Term A facility with a total principal amount of covenant restrictions.
$2.0 billion, of which 12.5% matures in 2007, 30% Charter Operating Credit Facilities — Restrictive Covenants. The Char-
matures in 2008, 37.5% matures in 2009 and 20% ter Operating credit facilities contain representations and war-
matures in 2010; and ranties, and affirmative and negative covenants customary for
(ii) a Term B facility with a total principal amount of financings of this type. The financial covenants measure per-
$3.0 billion, which shall be repayable in 27 equal formance against standards set for leverage, debt service
quarterly installments aggregating in each loan year to coverage, and interest coverage, tested as of the end of each
1% of the original amount of the Term B facility, with quarter. The maximum allowable leverage ratio is 4.25 to 1.0
the remaining balance due at final maturity in 2011; and until maturity, tested as of the end of each quarter beginning
September 30, 2004. Additionally, the Charter Operating credit
(a revolving credit facility, in a total amount of $1.5 billion,
facilities contain provisions requiring mandatory loan prepay-
with a maturity date in 2010.
ments under specific circumstances, including when significant
Amounts outstanding under the Charter Operating credit amounts of assets are sold and the proceeds are not reinvested
facilities bear interest, at Charter Operating’s election, at a base in assets useful in the business of the borrower within a
rate or the Eurodollar rate (4.06% to 4.50% as of December 31, specified period, and upon the incurrence of certain indebted-
2005 and 2.07% to 2.28% as of December 31, 2004), as defined, ness when the ratio of senior first lien debt to operating cash
plus a margin for Eurodollar loans of up to 3.00% for the Term flow is greater than 2.0 to 1.0.
A facility and revolving credit facility, and up to 3.25% for the The Charter Operating credit facilities permit Charter
Term B facility, and for base rate loans of up to 2.00% for the Operating and its subsidiaries to make distributions to pay
Term A facility and revolving credit facility, and up to 2.25% for interest on the Charter Operating senior second-lien notes, the
the Term B facility. A quarterly commitment fee of up to .75% CIH notes, the CCH I notes, the CCH II senior notes, the CCO
is payable on the average daily unborrowed balance of the Holdings senior notes, the Charter convertible senior notes, the
revolving credit facilities. CCHC notes and the Charter Holdings senior notes, provided
The obligations of our subsidiaries under the Charter that, among other things, no default has occurred and is
Operating credit facilities (the ‘‘Obligations’’) are guaranteed by continuing under the Charter Operating credit facilities. Condi-
Charter Operating’s immediate parent company, CCO Holdings, tions to future borrowings include absence of a default or an
and the subsidiaries of Charter Operating, except for immaterial event of default under the Charter Operating credit facilities and
subsidiaries and subsidiaries precluded from guaranteeing by the continued accuracy in all material respects of the representa-
reason of the provisions of other indebtedness to which they are tions and warranties, including the absence since December 31,
subject (the ‘‘non-guarantor subsidiaries,’’ primarily Renaissance 2003 of any event, development or circumstance that has had or
and its subsidiaries). The Obligations are also secured by (i) a could reasonably be expected to have a material adverse effect
lien on all of the assets of Charter Operating and its subsidiaries on our business.
(other than assets of the non-guarantor subsidiaries), to the The events of default under the Charter Operating credit
extent such lien can be perfected under the Uniform Commer- facilities include, among other things:
cial Code by the filing of a financing statement, and (ii) a pledge
(the failure to make payments when due or within the
by CCO Holdings of the equity interests owned by it in Charter applicable grace period,
Operating or any of Charter Operating’s subsidiaries, as well as
intercompany obligations owing to it by any of such entities. (the failure to comply with specified covenants, including
Upon the Charter Holdings Leverage Ratio (as defined in but not limited to a covenant to deliver audited financial
the indenture governing the Charter Holdings senior notes and statements with an unqualified opinion from our indepen-
senior discount notes) being under 8.75 to 1.0, the Charter dent auditors,
Operating credit facilities required that the 11.875% notes due (the failure to pay or the occurrence of events that cause or
2008 issued by CC V Holdings, LLC be redeemed. Because permit the acceleration of other indebtedness owing by
such Leverage Ratio was determined to be under 8.75 to 1.0, CCO Holdings, Charter Operating or Charter Operating’s
CC V Holdings, LLC redeemed such notes in March 2005, and subsidiaries in amounts in excess of $50 million in aggregate
CC V Holdings, LLC and its subsidiaries (other than non- principal amount,
guarantor subsidiaries) became guarantors of the Obligations and
have granted a lien on all of their assets as to which a lien can (the failure to pay or the occurrence of events that result in
be perfected under the Uniform Commercial Code by the filing the acceleration of other indebtedness owing by certain of
of a financing statement. CCO Holdings’ direct and indirect parent companies in
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