Charter 2009 Annual Report Download - page 45

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combination of the categories of permitted 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:
• CCH II: the sum of 100% of CCH II’ s Consolidated EBITDA, as defined, minus 1.3 times its Consolidated
Interest Expense, as defined, cumulatively from October 1, 2009 plus 100% of new cash and appraised
non-cash equity proceeds received by CCH II and not allocated to certain investments, cumulatively from
November 30, 2009;
• CCO Holdings: the sum of 100% of CCO Holdings’ 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 CCO Holdings and not allocated to certain investments, cumulatively from October 1,
2003, plus $100 million; and
• Charter 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:
• to repurchase management equity interests in amounts not to exceed $10 million per fiscal year;
• regardless 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
• to make other specified restricted payments including merger fees up to 1.25% of the transaction value,
repurchases using concurrent new issuances, and certain dividends on existing subsidiary preferred equity
interests.
Each of 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 subsidiaries 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:
• investments in and generally among restricted subsidiaries or by restricted subsidiaries in the applicable
issuer;
• For CCH II:
• investments aggregating up to $650 million at any time outstanding;
• investments aggregating up to 100% of new cash equity proceeds received by CCH II since November
30, 2009 to the extent the proceeds have not been allocated to the restricted payments covenant;
• For CCO Holdings:
• investments aggregating up to $750 million at any time outstanding;