Charter 2007 Annual Report Download - page 61

CCH II 2013 Notes are guaranteed on a senior unsecured basis
by Charter Holdings. The CCH II notes are structurally subordi-
nated to all obligations of subsidiaries of CCH II, including the
CCO Holdings notes, the Charter Operating notes and the
Charter Operating credit facilities.
CCO Holdings, LLC Notes
In November 2003 and August 2005, CCO Holdings and CCO
Holdings Capital Corp. jointly issued $500 million and $300 mil-
lion, respectively, total principal amount of 83⁄4% senior notes due
2013 (the “CCOH 2013 Notes”). The CCOH 2013 Notes are
senior debt obligations of CCO Holdings and CCO Holdings
Capital Corp. They rank equally with all other current and future
unsecured, unsubordinated obligations of CCO Holdings and
CCO Holdings Capital Corp., including the CCO Holdings credit
facility. The CCOH 2013 Notes are structurally subordinated to
all obligations of subsidiaries of CCO Holdings, including the
Charter Operating notes and the Charter Operating credit
facilities.
Charter Communications Operating, LLC Notes
On April 27, 2004, Charter Operating and Charter Communica-
tions Operating Capital Corp. jointly issued $1.1 billion of
8% senior second-lien notes due 2012 and $400 million of
83⁄8% senior second-lien notes due 2014. In March and June 2005,
Charter Operating consummated exchange transactions with a
small number of institutional holders of Charter Holdings
8.25% senior notes due 2007 pursuant to which Charter Operat-
ing issued, in private placement transactions, approximately
$333 million principal amount of its 83⁄8% senior second-lien
notes due 2014 in exchange for approximately $346 million of
the Charter Holdings 8.25% senior notes due 2007. In March
2006, Charter Operating exchanged $37 million of Renaissance
Media Group LLC 10% senior discount notes due 2008 for
$37 million principal amount of Charter Operating 83⁄8% senior
second-lien notes due 2014.
Subject to specified limitations, CCO Holdings and those
subsidiaries of Charter Operating that are guarantors of, or
otherwise obligors with respect to, indebtedness under the Char-
ter Operating credit facilities and related obligations are required
to guarantee the Charter Operating notes. The note guarantee of
each such guarantor is:
ka senior obligation of such guarantor;
kstructurally senior to the outstanding CCO Holdings notes
(except in the case of CCO Holdings’ note guarantee, which
is structurally pari passu with such senior notes), the out-
standing CCH II notes, the outstanding CCH I notes, the
outstanding CIH notes, the outstanding Charter Holdings
notes and the outstanding Charter convertible senior notes;
ksenior in right of payment to any future subordinated
indebtedness of such guarantor; and
keffectively senior to the relevant subsidiary’s unsecured
indebtedness, to the extent of the value of the collateral but
subject to the prior lien of the credit facilities.
The Charter Operating notes and related note guarantees
are secured by a second-priority lien on all of Charter Oper-
ating’s and its subsidiaries’ assets that secure the obligations of
Charter Operating or any subsidiary of Charter Operating with
respect to the Charter Operating credit facilities and the related
obligations. The collateral currently consists of the capital stock
of Charter Operating held by CCO Holdings, all of the intercom-
pany obligations owing to CCO Holdings by Charter Operating
or any subsidiary of Charter Operating, and substantially all of
Charter Operating’s and the guarantors’ assets (other than the
assets of CCO Holdings) in which security interests may be
perfected under the Uniform Commercial Code by filing a
financing statement (including capital stock and intercompany
obligations), including, but not limited to:
kwith certain exceptions, all capital stock (limited in the case
of capital stock of foreign subsidiaries, if any, to 66% of the
capital stock of first tier foreign Subsidiaries) held by Charter
Operating or any guarantor; and
kwith certain exceptions, all intercompany obligations owing
to Charter Operating or any guarantor.
In the event that additional liens are granted by Charter
Operating or its subsidiaries to secure obligations under the
Charter Operating credit facilities or the related obligations,
second priority liens on the same assets will be granted to secure
the Charter Operating notes, which liens will be subject to the
provisions of an intercreditor agreement (to which none of
Charter Operating or its affiliates are parties). Notwithstanding
the foregoing sentence, no such second priority liens need be
provided if the time such lien would otherwise be granted is not
during a guarantee and pledge availability period (when the
Leverage Condition is satisfied), but such second priority liens
will be required to be provided in accordance with the foregoing
sentence on or prior to the fifth business day of the commence-
ment of the next succeeding guarantee and pledge availability
period.
The Charter Operating notes are senior debt obligations of
Charter Operating and Charter Communications Operating Cap-
ital Corp. To the extent of the value of the collateral (but subject
to the prior lien of the credit facilities), they rank effectively
senior to all of Charter Operating’s future unsecured senior
indebtedness.
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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