Charter 2007 Annual Report Download - page 95

exchange were thereafter distributed to Charter Holdings and
cancelled. The exchange resulted in a gain on extinguishment of
debt of approximately $108 million for the year ended Decem-
ber 31, 2006, included in gain (loss) on extinguishment of debt
and preferred stock on the Company’s consolidated statements
of operations.
In April 2007, Charter Holdings completed a tender offer, in
which $97 million of Charter Holdings’ notes were accepted in
exchange for $100 million of total consideration, including
premiums and accrued interest. In addition, Charter Holdings
redeemed $187 million of its 8.625% senior notes due April 1,
2009 and CCO Holdings redeemed $550 million of its senior
floating rate notes due December 15, 2010. These redemptions
closed in April 2007. The redemptions and tender resulted in a
loss on extinguishment of debt of approximately $22 million for
the year ended December 31, 2007, included in gain (loss) on
extinguishment of debt and preferred stock on the Company’s
consolidated statements of operations.
On April 1, 2007, $105 million of Charter Holdings
8.25% notes matured and were paid off with proceeds from the
CCO Holdings credit facility.
CCH I Holdings, LLC Notes
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 structurally
subordinated to all obligations of subsidiaries of CIH, including
the CCH I notes, the CCH II notes, the CCO Holdings notes,
the Charter Operating notes and the Charter Operating credit
facilities. The CIH notes are guaranteed on a senior unsecured
basis by Charter Holdings. As of December 31, 2007, there was
$2.5 billion in accreted value for legal purposes and notes
indentures purposes.
The CIH notes may be redeemed at any time at a premium.
The optional redemption price declines to 100% of the respective
series’ principal amount, plus accrued and unpaid interest, on or
after varying dates generally in 2009 and 2010.
In the event that a specified change of control event
happens, CIH and CCH I Holdings Capital Corp. must offer to
repurchase any outstanding notes at a price equal to the sum of
the accreted value of the notes plus accrued and unpaid interest
plus a premium that varies over time.
CCH I, LLC Notes
The CCH I 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 CCH I’s 70% interest in the 24,273,943
Class A preferred membership units of CC VIII (collectively, the
“CC VIII interest”), 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. As of December 31, 2007,
there was $4.0 billion in accreted value for legal purposes and
notes indentures purposes.
CCH I and CCH I Capital Corp. may, prior to October 1,
2008 in the event of a qualified equity offering providing
sufficient proceeds, redeem up to 35% of the aggregate principal
amount of the CCH I notes at a redemption price of 111% of the
principal amount plus accrued and unpaid interest. Aside from
this provision, CCH I and CCH I Capital Corp. may not redeem
at their option any of the notes prior to October 1, 2010. On or
after October 1, 2010, CCH I and CCH I Capital Corp. may
redeem, in whole or in part, CCH I notes at anytime, in each
case at a premium. The optional redemption price declines to
100% of the principal amount, plus accrued and unpaid interest,
on or after October 1, 2013.
If a change of control occurs, each holder of the CCH I
notes will have the right to require the repurchase of all or any
part of that holder’s CCH I notes at 101% of the principal
amount plus accrued and unpaid interest.
CCH II, LLC Notes
The CCH II Notes are senior debt obligations of CCH II and
CCH II Capital Corp. The CCH II Notes rank equally with all
other current and future unsecured, unsubordinated obligations
of CCH II and CCH II Capital Corp. The CCH II 2013 Notes
are guaranteed on a senior unsecured basis by Charter Holdings.
The CCH II notes are structurally subordinated to all obligations
of subsidiaries of CCH II, including the CCO Holdings notes, the
Charter Operating notes and the Charter Operating credit
facilities.
On or after September 15, 2008, the issuers of the CCH II
2010 Notes may redeem all or a part of the notes at a redemp-
tion price that declines ratably from the initial redemption price
of 105.125% to a redemption price on or after September 15,
2009 of 100.0% of the principal amount of the CCH II 2010
Notes redeemed, plus, in each case, any accrued and unpaid
interest. On or after October 1, 2010, the issuers of the CCH II
2013 Notes may redeem all or a part of the notes at a redemp-
tion price that declines ratably from the initial redemption price
of 105.125% to a redemption price on or after October 1, 2012 of
100.0% of the principal amount of the CCH II 2013 Notes
redeemed, plus, in each case, any accrued and unpaid interest.
In the event of specified change of control events, CCH II
must offer to purchase the outstanding CCH II notes from the
holders at a purchase price equal to 101% of the total principal
amount of the notes, plus any accrued and unpaid interest.
F-17
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2007 FORM 10-K
Notes to Consolidated Financial Statements (continued)