Charter 2007 Annual Report Download - page 96

CCO Holdings Notes
The CCO Holdings 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.
The CCO Holdings notes are structurally subordinated to all
obligations of subsidiaries of CCO Holdings, including the Char-
ter Operating notes and the Charter Operating credit facilities.
On or after November 15, 2008, the issuers of the CCO
Holdings 83⁄4% senior notes may redeem all or a part of the notes
at a redemption price that declines ratably from the initial
redemption price of 104.375% to a redemption price on or after
November 15, 2011 of 100.0% of the principal amount of the
CCO Holdings 83⁄4% senior notes redeemed, plus, in each case,
any accrued and unpaid interest.
Prior to their redemption in April 2007, interest on the
CCO Holdings senior floating rate notes accrued at the LIBOR
rate (5.36% as of December 31, 2006) plus 4.125% annually, from
the date interest was most recently paid.
In the event of specified change of control events, CCO
Holdings must offer to purchase the outstanding CCO Holdings
senior 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.
Charter Operating Notes
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. 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). CCO Holdings and those subsidiaries
of Charter Operating that are guarantors of, or otherwise obligors
with respect to, indebtedness under the Charter Operating credit
facilities and related obligations, guarantee the Charter Operating
notes.
Charter Operating may, at any time and from time to time,
at their option, redeem the outstanding 8% second lien notes due
2012, in whole or in part, at a redemption price equal to 100% of
the principal amount thereof plus accrued and unpaid interest, if
any, to the redemption date, plus the Make-Whole Premium.
The Make-Whole Premium is an amount equal to the excess of
(a) the present value of the remaining interest and principal
payments due on an 8% senior second-lien note due 2012 to its
final maturity date, computed using a discount rate equal to the
Treasury Rate on such date plus 0.50%, over (b) the outstanding
principal amount of such Note.
On or after April 30, 2009, Charter Operating may redeem
all or a part of the 83⁄8% senior second lien notes at a redemption
price that declines ratably from the initial redemption price of
104.188% to a redemption price on or after April 30, 2012 of
100% of the principal amount of the 83⁄8% senior second lien
notes redeemed plus in each case accrued and unpaid interest.
In the event of specified change of control events, Charter
Operating must offer to purchase the Charter Operating notes at
a purchase price equal to 101% of the total principal amount of
the Charter Operating notes repurchased plus any accrued and
unpaid interest thereon.
High-Yield Restrictive Covenants; Limitation on Indebtedness.
The indentures governing the Charter Holdings, CIH, CCH II,
CCO Holdings and Charter Operating notes contain certain
covenants that restrict the ability of Charter Holdings, Charter
Capital, CIH, CIH Capital Corp., CCH I, CCH I Capital Corp.,
CCH II, CCH II Capital Corp., CCO Holdings, CCO Holdings
Capital Corp., Charter Operating, Charter Communications
Operating Capital Corp., and all of their restricted subsidiaries to:
kincur additional debt;
kpay dividends on equity or repurchase equity;
kmake investments;
ksell all or substantially all of their assets or merge with or
into other companies;
ksell assets;
kenter into sale-leasebacks;
kin the case of restricted subsidiaries, create or permit to exist
dividend or payment restrictions with respect to the bond
issuers, guarantee their parent companies debt, or issue
specified equity interests;
kengage in certain transactions with affiliates; and
kgrant liens.
CCO Holdings Credit Facility
In March 2007, CCO Holdings entered into a credit agreement
among CCO Holdings, the several lenders from time to time that
are parties thereto, Bank of America, N.A., as administrative
agent, and certain other agents (the “CCO Holdings credit
facility”). The CCO Holdings credit facility consists of a $350 mil-
lion term loan, which is fully drawn. The term loan matures on
September 6, 2014. The CCO Holdings credit facility also allows
the Company to enter into incremental term loans in the future,
maturing on the dates set forth in the notices establishing such
term loans, but no earlier than the maturity date of the existing
term loans. However, no assurance can be given that the
Company could obtain such incremental term loans if CCO
Holdings sought to do so. Borrowings under the CCO Holdings
credit facility bear interest at a variable interest rate based on
either LIBOR or a base rate plus, in either case, an applicable
margin. The applicable margin for LIBOR term loans, other than
incremental loans, is 2.50% above LIBOR. The applicable margin
F-18
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2007 FORM 10-K
Notes to Consolidated Financial Statements (continued)