Charter 2005 Annual Report Download - page 78

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
notes representing 30% of the total principal amount outstand- other specified restricted payments without meeting the forego-
ing at maturity tendered their Renaissance notes for repurchase. ing test.
The limitations on incurrence of debt contained in the Renaissance Media Group and its restricted subsidiaries are
indenture governing the Renaissance notes permit Renaissance not permitted to grant liens on their assets other than specified
Media Group and its restricted subsidiaries to incur additional permitted liens, unless corresponding liens are granted to secure
debt, so long as they are not in default under the indenture: the Renaissance notes. Permitted liens include liens securing
debt permitted to be incurred under credit facilities, liens
(if, after giving effect to the incurrence, Renaissance Media securing debt incurred under the incurrence of indebtedness test,
Group could meet a leverage ratio (ratio of consolidated in amounts up to the greater of $200 million or 4.5 times
debt to four times consolidated EBITDA, as defined, from Renaissance Media Group’s consolidated EBITDA, as defined,
the most recent quarter) of 6.75 to 1.0, and, regardless of liens as deposits for acquisitions up to 10% of the estimated
whether the leverage ratio could be met, purchase price, liens securing permitted financings of new assets,
(up to the greater of $200 million or 4.5 times Renaissance liens securing debt permitted to be incurred by restricted
Media Group’s consolidated annualized EBITDA, as subsidiaries, and specified liens incurred in the ordinary course
defined, of business.
Renaissance Media Group and the issuers of the Renais-
(up to an amount equal to 5% of Renaissance Media sance notes are generally not permitted to sell or otherwise
Group’s consolidated total assets to finance the purchase of dispose of all or substantially all of their assets or merge with or
new assets, into other companies unless their consolidated net worth after
(up to two times the sum of (a) the net cash proceeds of any such transaction would be equal to or greater than their
new equity issuances and capital contributions, and (b) 80% consolidated net worth immediately prior to the transaction, or
of the fair market value of property received by Renaissance unless Renaissance Media Group could incur $1.00 of additional
Media Group or an issuer as a capital contribution, in each debt under the debt incurrence test, which would require them
case received after the issue date of the Renaissance notes to meet a leverage ratio of 6.75 to 1.00 after giving effect to the
and not allocated to make restricted payments, and transaction.
Renaissance Media Group and its subsidiaries may gener-
(other items of indebtedness for specific purposes such as
ally not otherwise sell assets or, in the case of subsidiaries,
intercompany debt, refinancing of existing debt and interest
equity interests, unless they receive consideration at least equal
rate swaps to provide protection against fluctuation in
to the fair market value of the assets, consisting of at least 75%
interest rates.
cash, temporary cash investments or assumption of debt.
The indenture governing the Renaissance notes permits us Charter Holdings and its restricted subsidiaries are then required
to incur debt under one of the categories above, and reclassify within 12 months after any asset sale either to commit to use
the debt into a different category. the net cash proceeds over a specified threshold either to
Under the indenture governing the Renaissance notes, acquire assets used in their own or related businesses or use the
Renaissance Media Group and its restricted subsidiaries are net cash proceeds to repay debt, or to offer to repurchase the
permitted to pay dividends on equity interests, repurchase Renaissance notes with any remaining proceeds.
interests, make restricted investments, or make other specified Renaissance Media Group and its restricted subsidiaries
restricted payments only if Renaissance Media Group could may generally not engage in sale and leaseback transactions
incur $1.00 of additional debt under the debt incurrence test, unless the lease term does not exceed three years or the
which requires that Renaissance Media Group meet the 6.75 to proceeds are applied in accordance with the covenant limiting
1.0 leverage ratio after giving effect to the transaction of the asset sales.
indebtedness covenant and that no default exists or would occur Renaissance Media Group’s restricted subsidiaries may
as a consequence thereof. If those conditions are met, Renais- generally not enter into restrictions on their abilities to make
sance Media Group and its restricted subsidiaries are permitted dividends or distributions or transfer assets to Renaissance
to make restricted payments in a total amount not to exceed the Media Group except those not more restrictive than is
result of 100% of Renaissance Media Group’s consolidated customary in comparable financings.
EBITDA, as defined, minus 130% of its consolidated interest The restricted subsidiaries of Renaissance Media Group are
expense, plus 100% of new cash equity proceeds received by not permitted to guarantee or pledge assets to secure debt of
Renaissance Media Group and not allocated to the indebtedness the Renaissance Media Group or its restricted subsidiaries,
covenant, plus returns on certain investments, all cumulatively unless the guarantying subsidiary issues a guarantee of the
from June 1998. Renaissance Media Group and its restricted Renaissance notes of comparable priority and tenor, and waives
subsidiaries may make permitted investments up to $2 million in any rights of reimbursement, indemnity or subrogation arising
related businesses and other specified permitted investments, from the guarantee transaction.
restricted payments up to $10 million, dividends up to 6% each Renaissance Media Group and its restricted subsidiaries are
year of the net cash proceeds of public equity offerings, and generally not permitted to issue or sell equity interests in
restricted subsidiaries, except sales of common stock of
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