Charter 2007 Annual Report Download - page 59

The 5.875% convertible senior notes are convertible at any
time at the option of the holder into shares of Class A common
stock at an initial conversion rate of 413.2231 shares per $1,000
principal amount of notes, which is equivalent to a conversion
price of approximately $2.42 per share, subject to certain adjust-
ments. Specifically, the adjustments include anti-dilutive provi-
sions, which cause adjustments to occur automatically based on
the occurrence of specified events to provide protection rights to
holders of the notes. The conversion rate may also be increased
(but not to exceed 462 shares per $1,000 principal amount of
notes) upon a specified change of control transaction. Addition-
ally, Charter may elect to increase the conversion rate under
certain circumstances when deemed appropriate, subject to appli-
cable limitations of the NASDAQ Global Select Market.
No holder of notes will be entitled to receive shares of
Charter’s Class A common stock on conversion to the extent
that receipt of the shares would cause the converting holder to
become, directly or indirectly, a “beneficial holder” (within the
meaning of Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) of more than 4.9% of the
outstanding shares of Charter’s Class A common stock if such
conversion would take place prior to November 16, 2008, or
more than 9.9% thereafter.
If a holder tenders a note for conversion, we may direct that
holder (unless we have called those notes for redemption) to a
financial institution designated by us to conduct a transaction
with that institution, on substantially the same terms that the
holder would have received on conversion. But if any such
financial institution does not accept such notes or does not
deliver the required conversion consideration, we remain obli-
gated to convert the notes.
Upon a change of control and certain other fundamental
changes, subject to certain conditions and restrictions, Charter
may be required to repurchase the 5.875% convertible senior
notes, in whole or in part, at 100% of their principal amount plus
accrued interest at the repurchase date.
We may redeem the 5.875% convertible senior notes in
whole or in part for cash at any time at a redemption price equal
to 100% of the aggregate principal amount, plus accrued and
unpaid interest, deferred interest, and liquidated damages, if any,
but only if for any 20 trading days in any 30 consecutive trading
day period the closing price has exceeded 150% of the conver-
sion price, or $3.63 per share. Holders who convert 5.875%
convertible senior notes that we have called for redemption shall
receive the present value of the interest on the notes converted
that would have been payable for the period from the redemp-
tion date, through the scheduled maturity date for the notes, plus
any accrued deferred interest.
Charter Communications, Inc. 6.50% Convertible Senior Notes due 2027
On October 2, 2007, Charter issued $479 million of Charter’s
6.50% convertible senior notes due 2027 (the “6.50% Convertible
Notes”). The 6.50% Convertible Notes mature on October 1,
2027, subject to earlier conversion or repurchase at the option of
the holders or earlier redemption at our option. The 6.50% Con-
vertible Notes are unsecured and unsubordinated obligations and
rank equally with Charter’s existing and future senior unsecured
indebtedness, including the 5.875% convertible senior notes. The
6.50% Convertible Notes rank senior in right of payment to any
future subordinated indebtedness of Charter and are effectively
subordinated to any of Charter’s secured indebtedness and struc-
turally subordinate to indebtedness and other liabilities of
Charter’s subsidiaries. Interest is payable semi-annually in arrears.
The 6.50% Convertible Notes are convertible into Class A
common stock at the conversion rate of 293.3868 shares per
$1,000 principal amount of notes which is equivalent to a
conversion price of approximately $3.41 per share, subject to
certain adjustments. The adjustments include anti-dilution provi-
sions, which cause adjustments to occur automatically based on
the occurrence of specified events. If certain transactions that
constitute a change of control occur on or prior to October 1,
2012, under certain circumstances, we will increase the conver-
sion rate by a number of additional shares for any conversion of
6.50% Convertible Notes in connection with such transactions.
The conversion rate may also be increased (but not to exceed
381 shares per $1,000 principal amount of notes) upon a
specified change of control transaction. Additionally, Charter
may elect to increase the conversion rate under certain circum-
stances when deemed appropriate, subject to applicable limita-
tions of the NASDAQ Global Select Market.
No holder of 6.50% Convertible Notes will be entitled to
receive shares of Charter’s Class A common stock upon conver-
sion to the extent, but only to the extent, that such receipt would
cause such holder to become, directly or indirectly, a beneficial
owner of more than 4.9% of the shares of Class A common stock
outstanding prior to October 1, 2011, and 9.9% of the shares of
Class A common stock thereafter.
We may redeem the 6.50% Convertible Notes in whole or
in part for cash at any time at a redemption price equal to 100%
of the principal amount, plus accrued and unpaid interest, if any,
but only if for any 20 trading days in any 30 consecutive trading
day period the closing price has exceeded 180% of the conver-
sion price provided such 30 trading day period begins prior to
October 1, 2010, or 150% of the conversion price provided such
30 trading period begins thereafter and before October 1, 2012,
or at the redemption price regardless of the closing price of
Charter’s Class A common stock thereafter. Holders who convert
any 6.50% Convertible Notes prior to October 1, 2012 that we
have called for redemption shall receive the present value of the
interest on the notes converted that would have been payable for
the period from the redemption date to, but excluding, October 1,
2012.
Upon a change of control and certain other fundamental
changes, subject to certain conditions and restrictions, we may
be required to repurchase the notes, in whole or in part, at 100%
of their principal amount plus accrued interest at the repurchase
date.
Each holder of 6.50% Convertible Notes will have the right
to require us to purchase some or all of that holder’s 6.50% Con-
vertible Notes for cash on October 1, 2012, October 1, 2017 and
October 1, 2022 at a purchase price equal to 100% of the
principal amount of the 6.50% Convertible Notes plus any
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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