Charter 2006 Annual Report Download - page 101

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2006 FORM 10-K
Notes to Consolidated Financial Statements (continued)
In September 2006, Charter Holdings, CCH I and CCH II, sufficient proceeds, redeem up to 35% of the aggregate principal
completed the exchange of approximately $797 million in total amount of the CCH I notes at a redemption price of 111% of
principal amount of outstanding debt securities of Charter the principal amount plus accrued and unpaid interest. Aside
Holdings for $250 million principal amount of new 10.25% from this provision, CCH I and CCH I Capital Corp. may not
CCH II notes due 2013 and $462 million principal amount of redeem at their option any of the notes prior to October 1,
11% CCH I notes due 2015. The Charter Holdings notes 2010. On or after October 1, 2010, CCH I and CCH I Capital
received in the exchange were thereafter distributed to Charter Corp. may redeem, in whole or in part, CCH I notes at
Holdings and cancelled. The exchange between Charter Hold- anytime, in each case at a premium. The optional redemption
ings and CCH I and CCH II resulted in a gain on extinguish- price declines to 100% of the principal amount, plus accrued
ment of debt of approximately $108 million. and unpaid interest, on or after October 1, 2013.
If a change of control occurs, each holder of the CCH I
CCH I Holdings, LLC Notes notes will have the right to require the repurchase of all or any
The CIH notes are senior debt obligations of CIH and CCH I part of that holder’s CCH I notes at 101% of the principal
Holdings Capital Corp. They rank equally with all other current amount plus accrued and unpaid interest.
and future unsecured, unsubordinated obligations of CIH and
CCH I Holdings Capital Corp. The CIH notes are structurally CCH II, LLC Notes
subordinated to all obligations of subsidiaries of CIH, including The CCH II Notes are senior debt obligations of CCH II and
the CCH I notes, the CCH II notes, the CCO Holdings notes, CCH II Capital Corp. The CCH II Notes rank equally with all
the Charter Operating notes and the Charter Operating credit other current and future unsecured, unsubordinated obligations
facilities. The CIH notes are guaranteed on a senior unsecured of CCH II and CCH II Capital Corp. The CCH II 2013 Notes
basis by Charter Holdings. As of December 31, 2006, there was are guaranteed on a senior unsecured basis by Charter Holdings.
$2.3 billion in accreted value for legal purposes and notes The CCH II notes are structurally subordinated to all obliga-
indentures purposes. tions of subsidiaries of CCH II, including the CCO Holdings
The CIH notes may not be redeemed at the option of the notes, the Charter Operating notes and the Charter Operating
issuers until September 30, 2007. On or after such date, the CIH credit facilities.
notes may be redeemed at any time, in each case at a premium. On or after September 15, 2008, the issuers of the CCH II
The optional redemption price declines to 100% of the 2010 Notes may redeem all or a part of the notes at a
respective series’ principal amount, plus accrued and unpaid redemption price that declines ratably from the initial redemp-
interest, on or after varying dates in 2009 and 2010. tion price of 105.125% to a redemption price on or after
In the event that a specified change of control event September 15, 2009 of 100.0% of the principal amount of the
happens, CIH and CCH I Holdings Capital Corp. must offer to CCH II 2010 Notes redeemed, plus, in each case, any accrued
repurchase any outstanding notes at a price equal to the sum of and unpaid interest. On or after October 1, 2010, the issuers of
the accreted value of the notes plus accrued and unpaid interest the CCH II 2013 Notes may redeem all or a part of the notes at
plus a premium that varies over time. a redemption price that declines ratably from the initial
redemption price of 105.125% to a redemption price on or after
CCH I, LLC Notes October 1, 2012 of 100.0% of the principal amount of the
The CCH I notes are guaranteed on a senior unsecured basis by CCH II 2013 Notes redeemed, plus, in each case, any accrued
Charter Holdings and are secured by a pledge of 100% of the and unpaid interest.
equity interest of CCH I’s wholly owned direct subsidiary, In the event of specified change of control events, CCH II
CCH II, and by a pledge of CCH I’s 70% interest in the must offer to purchase the outstanding CCH II notes from the
24,273,943 Class A preferred membership units of CC VIII holders at a purchase price equal to 101% of the total principal
(collectively, the ‘‘CC VIII interest’’), and the proceeds thereof. amount of the notes, plus any accrued and unpaid interest.
Such pledges are subject to significant limitations as described in
the related pledge agreement. CCO Holdings Notes
The CCH I notes are senior debt obligations of CCH I and The CCO Holdings notes are senior debt obligations of CCO
CCH I Capital Corp. To the extent of the value of the Holdings and CCO Holdings Capital Corp. They rank equally
collateral, they rank senior to all of CCH I’s future unsecured with all other current and future unsecured, unsubordinated
senior indebtedness. The CCH I notes are structurally subordi- obligations of CCO Holdings and CCO Holdings Capital Corp.
nated to all obligations of subsidiaries of CCH I, including the The CCO Holdings notes are structurally subordinated to all
CCH II notes, CCO Holdings notes, the Charter Operating obligations of subsidiaries of CCO Holdings, including the
notes and the Charter Operating credit facilities. As of Decem- Charter Operating notes and the Charter Operating credit
ber 31, 2006, there was $4.0 billion in accreted value for legal facilities.
purposes and notes indentures purposes. On or after November 15, 2008, the issuers of the CCO
CCH I and CCH I Capital Corp. may, prior to October 1, Holdings 83
/4% senior notes may redeem all or a part of the
2008 in the event of a qualified equity offering providing notes at a redemption price that declines ratably from the initial
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