Charter 2007 Annual Report Download - page 64

kCharter Holdings and CIH may incur additional debt in an
amount equal to 200% of proceeds of new cash equity
proceeds received since March 1999, the date of our first
indenture, and not allocated for restricted payments or
permitted investments (the “Equity Proceeds Basket”); and
kother items of indebtedness for specific purposes such as
intercompany debt, refinancing of existing debt, and interest
rate swaps to provide protection against fluctuation in
interest rates.
Indebtedness under a single facility or agreement may be
incurred in part under one of the categories listed above and in
part under another, and generally may also later be reclassified
into another category including as debt incurred under the
leverage ratio. Accordingly, indebtedness under our credit facili-
ties is incurred under a combination of the categories of permit-
ted indebtedness listed above. The restricted subsidiaries of note
issuers are generally not permitted to issue subordinated debt
securities.
Restrictions on Distributions
Generally, under the various indentures each of the note issuers
and their respective restricted subsidiaries are permitted to pay
dividends on or repurchase equity interests, or make other
specified restricted payments, only if the applicable issuer can
incur $1.00 of new debt under the applicable leverage ratio test
after giving effect to the transaction and if no default exists or
would exist as a consequence of such incurrence. If those
conditions are met, restricted payments may be made in a total
amount of up to the following amounts for the applicable issuer
as indicated below:
kCharter Holdings: the sum of 100% of Charter Holdings’
Consolidated EBITDA, as defined, minus 1.2 times its
Consolidated Interest Expense, as defined, plus 100% of new
cash and appraised non-cash equity proceeds received by
Charter Holdings and not allocated to the debt incurrence
covenant or to permitted investments, all cumulatively from
March 1999, the date of the first Charter Holdings inden-
ture, plus $100 million;
kCIH: the sum of the greater of (a) $500 million or (b) 100%
of CIH’s Consolidated EBITDA, as defined, minus 1.2 times
its Consolidated Interest Expense, as defined, plus 100% of
new cash and appraised non-cash equity proceeds received
by CIH and not allocated to the debt incurrence covenant
or to permitted investments, all cumulatively from Septem-
ber 28, 2005;
kCCH I: the sum of 100% of CCH I’s Consolidated EBITDA,
as defined, minus 1.3 times its Consolidated Interest
Expense, as defined, plus 100% of new cash and appraised
non-cash equity proceeds received by CCH I and not
allocated to certain investments, all cumulative from Sep-
tember 28, 2005, plus $100 million;
kCCH II: the sum of 100% of CCH II’s Consolidated
EBITDA, as defined, minus 1.3 times its Consolidated
Interest Expense, as defined, plus 100% of new cash and
appraised non-cash equity proceeds received by CCH II and
not allocated to certain investments, cumulatively from
July 1, 2003, plus $100 million;
kCCO Holdings: the sum of 100% of CCO Holdings’ Consol-
idated EBITDA, as defined, minus 1.3 times its Consolidated
Interest Expense, as defined, plus 100% of new cash and
appraised non-cash equity proceeds received by CCO Hold-
ings and not allocated to certain investments, cumulatively
from October 1, 2003, plus $100 million; and
kCharter Operating: the sum of 100% of Charter Operating’s
Consolidated EBITDA, as defined, minus 1.3 times its
Consolidated Interest Expense, as defined, plus 100% of new
cash and appraised non-cash equity proceeds received by
Charter Operating and not allocated to certain investments,
cumulatively from April 1, 2004, plus $100 million.
In addition, each of the note issuers may make distributions
or restricted payments, so long as no default exists or would be
caused by transactions among other distributions or restricted
payments:
kto repurchase management equity interests in amounts not
to exceed $10 million per fiscal year;
kregardless of the existence of any default, to pay pass-
through tax liabilities in respect of ownership of equity
interests in the applicable issuer or its restricted subsidiaries;
or
kto make other specified restricted payments including
merger fees up to 1.25% of the transaction value, repur-
chases using concurrent new issuances, and certain divi-
dends on existing subsidiary preferred equity interests.
Each of CIH, CCH I, CCH II, CCO Holdings, and Charter
Operating and their respective restricted subsidiaries may make
distributions or restricted payments: (i) so long as certain defaults
do not exist and even if the applicable leverage test referred to
above is not met, to enable certain of its parents to pay interest
on certain of their indebtedness or (ii) so long as the applicable
issuer could incur $1.00 of indebtedness under the applicable
leverage ratio test referred to above, to enable certain of its
parents to purchase, redeem or refinance certain indebtedness.
Restrictions on Investments
Each of the note issuers and their respective restricted subsidiar-
ies may not make investments except (i) permitted investments
or (ii) if, after giving effect to the transaction, their leverage
would be above the applicable leverage ratio.
Permitted investments include, among others:
kinvestments in and generally among restricted subsidiaries or
by restricted subsidiaries in the applicable issuer;
kFor Charter Holdings:
kinvestments in productive assets (including through equity
investments) aggregating up to $150 million since March
1999;
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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