Charter 2005 Annual Report Download - page 73

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
Generally, under CCO Holdings’ indenture: 2003 to the extent the proceeds have not been allocated to
the restricted payments covenant described above,
(CCO Holdings and its restricted subsidiaries are permitted
to pay dividends on equity interests, repurchase interests, or (other investments up to $750 million outstanding at any
make other specified restricted payments only if CCO time, and
Holdings can incur $1.00 of new debt under the leverage (certain specified additional investments, such as investments
ratio test, which requires that CCO Holdings meet a 4.5 to in customers and suppliers in the ordinary course of
1.0 leverage ratio after giving effect to the transaction, and business and investments received in connection with
if no default exists or would exist as a consequence of such permitted asset sales.
incurrence. If those conditions are met, restricted payments
CCO Holdings is not permitted to grant liens on its assets
are permitted in a total amount of up to 100% of CCO
other than specified permitted liens. Permitted liens include liens
Holdings’ consolidated EBITDA, as defined, minus 1.3
securing debt and other obligations incurred under our subsidi-
times its consolidated interest expense, plus 100% of new
aries’ credit facilities, liens securing the purchase price of new
cash and appraised non-cash equity proceeds received by
assets, liens securing indebtedness up to $50 million and other
CCO Holdings and not allocated to the debt incurrence
specified liens incurred in the ordinary course of business. The
covenant, all cumulatively from the fiscal quarter com-
lien covenant does not restrict liens on assets of subsidiaries of
menced October 1, 2003, plus $100 million.
CCO Holdings.
In addition, CCO Holdings may make distributions or
CCO Holdings and CCO Holdings Capital, its co-issuer, are
restricted payments, so long as no default exists or would be
generally not permitted to sell all or substantially all of their
caused by the transaction:
assets or merge with or into other companies unless their
(to repurchase management equity interests in amounts not leverage ratio after any such transaction would be no greater
to exceed $10 million per fiscal year; than their leverage ratio immediately prior to the transaction, or
(to pay, regardless of the existence of any default, pass- unless CCO Holdings and its subsidiaries could incur $1.00 of
through tax liabilities in respect of ownership of equity new debt under the 4.50 to 1.0 leverage ratio test described
interests in Charter Holdings or its restricted subsidiaries; above after giving effect to the transaction, no default exists, and
the surviving entity is a U.S. entity that assumes the CCO
(to pay, regardless of the existence of any default, interest Holdings senior notes.
when due on the Charter convertible notes, Charter CCO Holdings and its restricted subsidiaries may generally
Holdings notes, CIH notes, CCH I notes and the CCH II not otherwise sell assets or, in the case of restricted subsidiaries,
notes; issue equity interests, unless they receive consideration at least
(to purchase, redeem or refinance Charter Holdings notes, equal to the fair market value of the assets or equity interests,
CIH notes, CCH I notes, CCH II notes, Charter notes, and consisting of at least 75% in cash, assumption of liabilities,
other direct or indirect parent company notes, so long as securities converted into cash within 60 days or productive
CCO Holdings could incur $1.00 of indebtedness under the assets. CCO Holdings and its restricted subsidiaries are then
4.5 to 1.0 leverage ratio test referred to above and there is required within 365 days after any asset sale either to commit to
no default; or use the net cash proceeds over a specified threshold to acquire
assets, including current assets, used or useful in their businesses
(to make other specified restricted payments including
or use the net cash proceeds to repay debt, or to offer to
merger fees up to 1.25% of the transaction value, repur-
repurchase the CCO Holdings senior notes with any remaining
chases using concurrent new issuances, and certain divi-
proceeds.
dends on existing subsidiary preferred equity interests.
CCO Holdings and its restricted subsidiaries may generally
The indenture governing the CCO Holdings senior notes not engage in sale and leaseback transactions unless, at the time
restricts CCO Holdings and its restricted subsidiaries from of the transaction, CCO Holdings could have incurred secured
making investments, except specified permitted investments, or indebtedness in an amount equal to the present value of the net
creating new unrestricted subsidiaries, if there is a default under rental payments to be made under the lease, and the sale of the
the indenture or if CCO Holdings could not incur $1.00 of new assets and application of proceeds is permitted by the covenant
debt under the 4.5 to 1.0 leverage ratio test described above restricting asset sales.
after giving effect to the transaction. CCO Holdings’ restricted subsidiaries may generally not
Permitted investments include: enter into restrictions on their ability to make dividends or
distributions or transfer assets to CCO Holdings on terms that
(investments by CCO Holdings and its restricted subsidiaries
are materially more restrictive than those governing their debt,
in CCO Holdings and in other restricted subsidiaries, or
lien, asset sale, lease and similar agreements existing when they
entities that become restricted subsidiaries as a result of the
entered into the indenture, unless those restrictions are on
investment,
customary terms that will not materially impair CCO Holdings’
(investments aggregating up to 100% of new cash equity ability to repay its notes.
proceeds received by CCO Holdings since November 10,
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