Charter 2007 Annual Report Download - page 60

accrued interest, if any, on the 6.50% Convertible Notes to but
excluding the purchase date.
CCHC, LLC Note
In October 2005, CCHC issued the CCHC note to CII. The
CCHC note has a 15-year maturity. The CCHC note has an
initial accreted value of $48 million accreting at the rate of
14% per annum compounded quarterly, except that from and
after February 28, 2009, CCHC may pay any increase in the
accreted value of the CCHC note in cash and the accreted value
of the CCHC note will not increase to the extent such amount is
paid in cash. The CCHC note is exchangeable at CII’s option, at
any time, for Charter Holdco Class A Common units at a rate
equal to the then accreted value, divided by $2.00 (the
“Exchange Rate”). Customary anti-dilution protections have been
provided that could cause future changes to the Exchange Rate.
Additionally, the Charter Holdco Class A Common units
received will be exchangeable by the holder into Charter Class B
common stock in accordance with existing agreements between
CII, Charter and certain other parties signatory thereto. Begin-
ning March 1, 2009, if the closing price of Charter common
stock is at or above the Exchange Rate for 20 trading days
within any 30 consecutive trading day period, Charter Holdco
may require the exchange of the CCHC note for Charter Holdco
Class A Common units at the Exchange Rate. Additionally,
CCHC has the right to redeem the CCHC note from and after
February 28, 2009 for cash in an amount equal to the then
accreted value. CCHC has the right to redeem the CCHC note
upon certain change of control events for cash in an amount
equal to the then accreted value, such amount, if redeemed prior
to February 28, 2009, would also include a make whole up to the
accreted value through February 28, 2009. CCHC must redeem
the CCHC note at its maturity for cash in an amount equal to
the initial stated value plus the accreted return through maturity.
The accreted value of the CCHC note is $65 million as of
December 31, 2007 and is recorded in Notes Payable – Related
Party in the accompanying consolidated financial statements
contained in “Item 8. Financial Statements and Supplementary
Data.”
Charter Communications Holdings, LLC Notes
From March 1999 through January 2002, Charter Holdings and
Charter Communications Holdings Capital Corporation (“Char-
ter Capital”) jointly issued $10.2 billion total principal amount of
notes, of which $578 million total principal amount was out-
standing as of December 31, 2007. The notes were issued over
15 series of notes with maturities from 2007 through 2012 and
have varying interest rates as set forth in the table above under
“Liquidity and Capital Resources – Overview of Our Debt and
Liquidity.” The Charter Holdings notes are senior debt obliga-
tions of Charter Holdings and Charter Capital. They rank equally
with all other current and future unsecured, unsubordinated
obligations of Charter Holdings and Charter Capital. They are
structurally subordinated to the obligations of Charter Holdings’
subsidiaries, including the CIH notes, the CCH I notes, CCH II
notes, the CCO Holdings notes, the Charter Operating notes,
and the Charter Operating credit facilities.
CCH I Holdings, LLC Notes
In September 2005, CIH and CCH I Holdings Capital Corp.
jointly issued $2.5 billion total principal amount of 9.92% to
13.50% senior accreting notes due 2014 and 2015 in exchange for
an aggregate amount of $2.4 billion of Charter Holdings notes
due 2011 and 2012, issued over six series of notes and with
varying interest rates as set forth in the table above under
“Liquidity and Capital Resources – Overview of Our Debt and
Liquidity.” The notes are guaranteed on a senior unsecured basis
by Charter Holdings.
The CIH notes are senior debt obligations of CIH and
CCH I Holdings Capital Corp. They rank equally with all other
current and future unsecured, unsubordinated obligations of CIH
and CCH I Holdings Capital Corp. The CIH notes are structur-
ally subordinated to all obligations of subsidiaries of CIH, includ-
ing the CCH I notes, the CCH II notes, the CCO Holdings
notes, the Charter Operating notes and the Charter Operating
credit facilities.
CCH I, LLC Notes
In September 2005, CCH I and CCH I Capital Corp. jointly
issued $3.5 billion total principal amount of 11% senior secured
notes due October 2015 in exchange for an aggregate amount of
$4.2 billion of certain Charter Holdings notes and, in September
2006, issued an additional $462 million total principal amount of
such notes in exchange for an aggregate of $527 million of
certain Charter Holdings notes. The notes are guaranteed on a
senior unsecured basis by Charter Holdings and are secured by a
pledge of 100% of the equity interest of CCH I’s wholly owned
direct subsidiary, CCH II, and by a pledge of the CC VIII
interests, and the proceeds thereof. Such pledges are subject to
significant limitations as described in the related pledge
agreement.
The CCH I notes are senior debt obligations of CCH I and
CCH I Capital Corp. To the extent of the value of the collateral,
they rank senior to all of CCH I’s future unsecured senior
indebtedness. The CCH I notes are structurally subordinated to
all obligations of subsidiaries of CCH I, including the CCH II
notes, CCO Holdings notes, the Charter Operating notes and the
Charter Operating credit facilities.
CCH II, LLC Notes
In September 2003 and January 2006, CCH II and CCH II
Capital Corp. jointly issued approximately $2.2 billion total
principal amount of 10.25% senior notes due 2010 (the “CCH II
2010 Notes”) and, in September 2006, issued $250 million total
principal amount of 10.25% senior notes due 2013 (the “CCH II
2013 Notes” and, together with the CCH II 2010 Notes, the
“CCH II notes”) in exchange for an aggregate of $270 million of
certain Charter Holdings notes. The CCH II Notes are senior
debt obligations of CCH II and CCH II Capital Corp. They rank
equally with all other current and future unsecured, unsubordi-
nated obligations of CCH II and CCH II Capital Corp. The
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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