Charter 2005 Annual Report Download - page 63

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
occurred and is continuing under the Charter Operating credit (viii) Charter Operating ceasing to be a wholly-owned
facilities. The Charter Operating credit facilities restrict the direct subsidiary of CCO Holdings, except in certain
ability of Charter Operating and its subsidiaries to make very limited circumstances.
distributions for the purpose of repaying indebtedness of their
OUTSTANDING NOTES
parent companies, except for repayments of certain indebtedness
which was existing at the time the credit facilities were Charter Communications, Inc. Notes
amended and restated, provided that certain conditions are met, 4.75% Charter Convertible Notes due 2006
including the satisfaction of a 1.5 to 1.0 interest coverage ratio
test and a minimum available liquidity requirement of $250 mil- In May 2001, Charter issued 4.75% convertible senior notes with
lion. Conditions to future borrowings include absence of a a total principal amount at maturity of $633 million. As of
default or an event of default under the Charter Operating credit December 31, 2005, there was $20 million in total principal
facilities and the continued accuracy in all material respects of amount of these notes outstanding. The 4.75% convertible notes
the representations and warranties, including the absence since rank equally with any of our future unsubordinated and
December 31, 2003 of any event, development or circumstance unsecured indebtedness, but are structurally subordinated to all
that has had or could reasonably be expected to have a material existing and future indebtedness and other liabilities of our
adverse effect on our business. subsidiaries.
The events of default under the Charter Operating credit The 4.75% convertible notes are convertible at the option
facilities include, among other things: of the holder into shares of Class A common stock at a
conversion rate of 38.0952 shares per $1,000 principal amount of
(i) the failure to make payments when due or within the
notes, which is equivalent to a price of $26.25 per share, subject
applicable grace period,
to certain adjustments. Specifically, the adjustments include anti-
(ii) the failure to comply with specified covenants, includ- dilutive provisions, which automatically occur based on the
ing but not limited to a covenant to deliver audited occurrence of specified events to provide protection rights to
financial statements with an unqualified opinion from holders of the notes. Additionally, Charter may adjust the
our independent auditors, conversion ratio under certain circumstances when deemed
(iii) the failure to pay or the occurrence of events that appropriate. These notes are redeemable at our option at
cause or permit the acceleration of other indebtedness amounts decreasing from 101.9% to 100% of the principal
owing by CCO Holdings, Charter Operating or amount, plus accrued and unpaid interest beginning on June 4,
Charter Operating’s subsidiaries in amounts in excess 2004, to the date of redemption. Interest is payable semiannually
of $50 million in aggregate principal amount, on December 1 and June 1, beginning December 1, 2001, until
maturity on June 1, 2006.
(iv) the failure to pay or the occurrence of events that Upon a change of control, subject to certain conditions and
result in the acceleration of other indebtedness owing restrictions, Charter may be required to repurchase the notes, in
by certain of CCO Holdings’ direct and indirect whole or in part, at 100% of their principal amount plus accrued
parent companies in amounts in excess of $200 mil- interest at the repurchase date.
lion in aggregate principal amount,
Charter 5.875% Convertible Senior Notes due 2009
(v) Paul Allen and/or certain of his family members
and/or their exclusively owned entities (collectively, In November 2004, Charter issued 5.875% convertible senior
the ‘‘Paul Allen Group’’) ceasing to have the power, notes due 2009 with a total original principal amount of
directly or indirectly, to vote at least 35% of the $862.5 million. The 5.875% convertible senior notes are
ordinary voting power of Charter Operating, unsecured (except with respect to the collateral as described
below) and rank equally with our existing and future
(vi) the consummation of any transaction resulting in any
unsubordinated and unsecured indebtedness (except with respect
person or group (other than the Paul Allen Group)
to the collateral described below), but are structurally subordi-
having power, directly or indirectly, to vote more
nated to all existing and future indebtedness and other liabilities
than 35% of the ordinary voting power of Charter
of our subsidiaries. Interest is payable semi-annually in arrears.
Operating, unless the Paul Allen Group holds a
The 5.875% convertible senior notes are convertible at any
greater share of ordinary voting power of Charter
time at the option of the holder into shares of Class A common
Operating,
stock at an initial conversion rate of 413.2231 shares per $1,000
(vii) certain of Charter Operating’s indirect or direct parent principal amount of notes, which is equivalent to a conversion
companies having indebtedness in excess of $500 mil- price of approximately $2.42 per share, subject to certain
lion aggregate principal amount which remains adjustments. Specifically, the adjustments include anti-dilutive
undefeased three months prior to the final maturity of provisions, which cause adjustments to occur automatically
such indebtedness, and based on the occurrence of specified events to provide protec-
tion rights to holders of the notes. The conversion rate may also
be increased (but not to exceed 462 shares per $1,000 principal
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