Charter 2009 Annual Report Download - page 42

39
CCO Holdings Credit Facility
The CCO Holdings credit facility contains covenants that are substantially similar to the restrictive covenants for the
CCO Holdings notes except that the leverage ratio is 5.50 to 1.0. See “—Summary of Restricted Covenants of Our
Notes.” The CCO Holdings credit facility contains provisions requiring mandatory loan prepayments under specific
circumstances, including in connection with certain sales of assets, so long as the proceeds have not been reinvested
in the business. The CCO Holdings credit facility permits CCO Holdings and its subsidiaries to make distributions
to pay interest on the CCH II notes, the CCO Holdings notes, the Charter Operating credit facilities and the Charter
Operating second-lien notes, provided that, among other things, no default has occurred and is continuing under the
CCO Holdings credit facility.
Notes
Provided below is a brief description of the notes issued by CCH II, CCO Holdings and Charter Operating.
CCH II Notes
On November 30, 2009, CCH II and CCH II Capital Corp. issued approximately $1.8 billion in total principal
amount of new 13.5% senior notes. The New CCH II Notes pay interest in cash semi-annually in arrears at the rate
of 13.5% per annum and are unsecured. The New CCH II Notes will mature on November 30, 2016. The New CCH
II Notes are structurally subordinated to all obligations of the subsidiaries of CCH II, including the CCO Holdings
notes and credit facility and the Charter operating notes and credit facilities.
CCO Holdings Notes
In November 2003 and August 2005, CCO Holdings and CCO Holdings Capital Corp. jointly issued $500 million
and $300 million, respectively, total principal amount of 8¾% 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. 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 Operating Notes
As of December 31, 2009, Charter Operating had $1.1 billion principal amount of 8.0% senior second-lien notes due
2012, $770 million principal amount of 8 3/8% senior second-lien notes due 2014, and $546 million principal
amount of 10.875% 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 Charter Operating credit facilities and related obligations
are required to guarantee the Charter Operating notes. The note guarantee of each such guarantor is:
• a senior obligation of such guarantor;
• structurally 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), and the outstanding CCH II notes;
• senior in right of payment to any future subordinated indebtedness of such guarantor; and
• effectively 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
Operating’ 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 intercompany 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: