Charter 2007 Annual Report Download - page 97

with respect to the incremental loans is to be agreed upon by
CCO Holdings and the lenders when the incremental loans are
established. The CCO Holdings credit facility is secured by the
equity interests of Charter Operating, and all proceeds thereof.
Charter Operating Credit Facilities
In March 2007, Charter Operating entered into the Charter
Operating credit facilities which provide for a $1.5 billion senior
secured revolving line of credit, a continuation of the existing
$5.0 billion term loan facility (the “Existing Term Loan”), and a
$1.5 billion new term loan facility (the “New Term Loan”),
which was funded in March and April 2007. The refinancing
resulted in a loss on extinguishment of debt for the year ended
December 31, 2007 of approximately $13 million included in gain
(loss) on extinguishment of debt and preferred stock on the
Company’s consolidated statements of operations. Borrowings
under the Charter Operating credit facilities 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 loans under the New Term Loan and revolving loans is
2.00% above LIBOR. The revolving line of credit commitments
terminate in March 2013. The Existing Term Loan and the New
Term Loan are subject to amortization at 1% of their initial
principal amount per annum commencing on March 31, 2008
with the remaining principal amount of the New Term Loan due
in March 2014. The Charter Operating credit facilities also
modified the quarterly consolidated leverage ratio to be less
restrictive.
The Charter Operating credit facilities provide borrowing
availability of up to $8.0 billion as follows:
ka term loan with a total principal amount of $6.5 billion,
which is repayable in equal quarterly installments, com-
mencing March 31, 2008, and aggregating in each loan year
to 1% of the original amount of the term loan, with the
remaining balance due at final maturity on March 6, 2014;
and
ka revolving line of credit of $1.5 billion, with a maturity date
on March 6, 2013.
The Charter Operating credit facilities also allow the Com-
pany to enter into incremental term loans in the future with an
aggregate amount of up to $1.0 billion, with amortization as set
forth in the notices establishing such term loans, but with no
amortization greater than 1% prior to the final maturity of the
existing term loan. However, no assurance can be given that such
incremental term loans could be obtained if Charter Operating
sought to do so.
Amounts outstanding under the Charter Operating credit
facilities bear interest, at Charter Operating’s election, at a base
rate or the Eurodollar rate (4.87% to 5.24% as of December 31,
2007 and 5.36% to 5.38% as of December 31, 2006), as defined,
plus a margin for Eurodollar loans of up to 2.00% for the
revolving credit facility and 2.00% for the term loan, and
quarterly commitment fee of 0.5% per annum is payable on the
average daily unborrowed balance of the revolving credit facility.
The obligations of Charter Operating under the Charter
Operating credit facilities (the “Obligations”) are guaranteed by
Charter Operating’s immediate parent company, CCO Holdings,
and the subsidiaries of Charter Operating, except for certain
subsidiaries, including immaterial subsidiaries and subsidiaries
precluded from guaranteeing by reason of provisions of other
indebtedness to which they are subject (the “non-guarantor
subsidiaries”). The Obligations are also secured by (i) a lien on
substantially all of the assets of Charter Operating and its
subsidiaries (other than assets of the non-guarantor subsidiaries),
and (ii) a pledge by CCO Holdings of the equity interests owned
by it in Charter Operating or any of Charter Operating’s subsid-
iaries, as well as intercompany obligations owing to it by any of
such entities.
As of December 31, 2007, outstanding borrowings under the
Charter Operating credit facilities were approximately $6.8 billion
and the unused total potential availability was approximately
$1.0 billion, none of which was limited by covenant restrictions.
Credit Facilities – Restrictive Covenants
Charter Operating Credit Facilities
The Charter Operating credit facilities contain representations
and warranties, and affirmative and negative covenants custom-
ary for financings of this type. The financial covenants measure
performance against standards set for leverage to be tested as of
the end of each quarter. Additionally, the Charter Operating
credit facilities contain provisions requiring mandatory loan pre-
payments under specific circumstances, including in connection
with certain sales of assets, so long as the proceeds have not
been reinvested in the business.
The Charter Operating credit facilities permit Charter Oper-
ating and its subsidiaries to make distributions to pay interest on
the Charter convertible notes, the Charter Holdings notes, the
CIH notes, the CCH I notes, the CCH II notes, the CCO
Holdings notes, the CCO Holdings credit facility, and the
Charter Operating senior second-lien notes, provided that,
among other things, no default has occurred and is continuing
under the Charter Operating credit facilities. Conditions to future
borrowings include absence of a default or an event of default
under the Charter Operating credit facilities, and the continued
accuracy in all material respects of the representations and
warranties, including the absence since December 31, 2005 of
any event, development, or circumstance that has had or could
reasonably be expected to have a material adverse effect on the
Company’s business.
The events of default under the Charter Operating credit
facilities include, among other things:
kthe failure to make payments when due or within the
applicable grace period,
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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2007 FORM 10-K
Notes to Consolidated Financial Statements (continued)