Charter 2005 Annual Report Download - page 69

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
The CCH I notes are senior debt obligations of CCH I and (other items of indebtedness for specific purposes such as
CCH I Capital Corp. To the extent of the value of the intercompany debt, refinancing of existing debt, and interest
collateral, they rank senior to all of CCH I’s future unsecured rate swaps to provide protection against fluctuation in
senior indebtedness. The CCH I notes are structurally subordi- interest rates.
nated to all obligations of subsidiaries of CCH I, including the The restricted subsidiaries of CCH I are generally not
CCH II notes, CCO Holdings notes, the Renaissance notes, the permitted to issue debt securities contractually subordinated to
Charter Operating notes and the Charter Operating credit other debt of the issuing subsidiary or preferred stock, in either
facilities. case in any public offering or private placement.
CCH I and CCH I Capital Corp. may, prior to October 1, The CCH I indenture generally permits CCH I and its
2008 in the event of a qualified equity offering providing restricted subsidiaries to incur debt under one category, and
sufficient proceeds, redeem up to 35% of the aggregate principal later reclassify that debt into another category. The Charter
amount of the CCH I notes at a redemption price of 111% of Operating credit facilities generally impose more restrictive
the principal amount plus accrued and unpaid interest. Aside limitations on incurring new debt than those in the CCH I
from this provision, CCH I and CCH I Capital Corp. may not indenture, so our subsidiaries that are subject to credit facilities
redeem at their option any of the notes prior to October 1, are not permitted to utilize the full debt incurrence that would
2010. On or after October 1, 2010, CCH I and CCH I Capital otherwise be available under the CCH I indenture covenants.
Corp. may redeem, in whole or in part, CCH I notes at the Generally, under the CCH I indenture:
applicable prices (expressed as percentages of principal amount)
(CCH I and its restricted subsidiaries are permitted to pay
listed below, plus accrued and unpaid interest if redeemed
dividends on equity interests, repurchase interests, or make
during the twelve month period beginning on October 1 of the
other specified restricted payments only if CCH I can incur
years listed below.
$1.00 of new debt under the leverage ratio test, which
requires that CCH I meet a 7.5 to 1.0 leverage ratio after
Year Percentage
giving effect to the transaction, and if no default exists or
2010 105.5% would exist as a consequence of such incurrence. If those
2011 102.75%
2012 101.375% conditions are met, restricted payments are permitted in a
2013 and thereafter 100.0% total amount of up to 100% of CCH I’s consolidated
EBITDA, as defined, for the period from September 28,
If a change of control occurs, each holder of the CCH I 2005 to the end of CCH I’s most recently ended full fiscal
notes will have the right to require the repurchase of all or any quarter for which financial statements are available minus
part of that holder’s CCH I notes at 101% of the principal 1.3 times its consolidated interest expense for such period,
amount plus accrued and unpaid interest. plus 100% of new cash and appraised non-cash equity
The indenture governing the CCH I notes contains proceeds received by CCH I and not allocated to certain
restrictive covenants that limit certain transactions or activities investments, from and after September 28, 2005, plus
by CCH I and its restricted subsidiaries, including the covenants $100 million.
summarized below. Substantially all of CCH I’s direct and
indirect subsidiaries are currently restricted subsidiaries. In addition, CCH I and its restricted subsidiaries may make
The covenant in the indenture governing the CCH I notes distributions or restricted payments, so long as no default exists
that restricts incurrence of debt and issuance of preferred stock or would be caused by the transaction:
permits CCH I and its subsidiaries to incur or issue specified (to repurchase management equity interests in amounts not
amounts of debt or preferred stock, if, after giving pro forma to exceed $10 million per fiscal year;
effect to the incurrence or issuance, CCH I could meet a
(to pay, regardless of the existence of any default, pass-
leverage ratio (ratio of consolidated debt to four times EBITDA,
through tax liabilities in respect of ownership of equity
as defined, from the most recent fiscal quarter for which internal
interests in CCH I or its restricted subsidiaries;
financial reports are available) of 7.5 to 1.0.
In addition, regardless of whether the leverage ratio could (to enable certain of its parents to pay interest on certain of
be met, so long as no default exists or would result from the their indebtedness;
incurrence or issuance, CCH I and its restricted subsidiaries are
(to enable certain of its parents to purchase, redeem or
permitted to incur or issue: refinance certain indebtedness, so long as CCH I could
(up to $9.75 billion of debt under credit facilities (less the incur $1.00 of indebtedness under the 7.5 to 1.0 leverage
amount of net proceeds of asset sales applied to repay such ratio test referred to above; or
debt as required by the asset sale covenant);
(to make other specified restricted payments including
(up to $75 million of debt incurred to finance the purchase merger fees up to 1.25% of the transaction value, repur-
or capital lease of new assets; chases using concurrent new issuances, and certain divi-
dends on existing subsidiary preferred equity interests.
(up to $300 million of additional debt for any purpose; and
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