Charter 2009 Annual Report Download - page 5

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(iii) holders of notes issued by CCH I received 21.1 million shares of new Charter Class A common stock; (iv)
holders of notes issued by CCH I Holdings, LLC (“CIH”) received 6.4 million warrants to purchase shares of new
Charter Class A common stock with an exercise price of $46.86 per share that expire five years from the date of
issuance; (v) holders of notes issued by Charter Communications Holdings, LLC (“Charter Holdings”) received 1.3
million warrants to purchase shares of new Charter Class A common stock with an exercise price of $51.28 per
share that expire five years from the date of issuance; (vi) holders of convertible notes issued by Charter received
$25 million and 5.5 million shares of preferred stock issued by Charter; and (vii) all previously outstanding shares of
Charter Class A and Class B common stock were cancelled. In addition, as part of the Plan, the holders of CCH I
notes received and transferred to Mr. Paul G. Allen, Charter’ s principal stockholder, $85 million of new CCH II
notes.
The consummation of the Plan was funded with cash on hand, the Notes Exchange, and net proceeds of
approximately $1.6 billion of an equity rights offering (the “Rights Offering”) in which holders of CCH I notes
purchased new Charter Class A common stock.
In connection with the Plan, Charter, Mr. Allen and Charter Investment, Inc. (“CII”) entered into a separate
restructuring agreement (as amended, the “Allen Agreement”), in settlement and compromise of their legal,
contractual and equitable rights, claims and remedies against Charter and its subsidiaries In addition to any amounts
received by virtue of CII’ s holding other claims against Charter and its subsidiaries, on the Effective Date, CII was
issued 2.2 million shares of the new Charter Class B common stock equal to 2% of the equity value of Charter, after
giving effect to the Rights Offering, but prior to issuance of warrants and equity-based awards provided for by the
Plan and 35% (determined on a fully diluted basis) of the total voting power of all new capital stock of Charter.
Each share of new Charter Class B common stock is convertible, at the option of the holder, into one share of new
Charter Class A common stock, and is subject to significant restrictions on transfer and conversion. Certain holders
of new Charter Class A common stock (and securities convertible into or exercisable or exchangeable therefore) and
new Charter Class B common stock received certain customary registration rights with respect to their shares. On
the Effective Date, CII received: (i) 4.7 million warrants to purchase shares of new Charter Class A common stock,
(ii) $85 million principal amount of new CCH II notes (transferred from CCH I noteholders), (iii) $25 million in
cash for amounts previously owed to CII under a management agreement, (iv) $20 million in cash for
reimbursement of fees and expenses in connection with the Plan, and (v) an additional $150 million in cash. The
warrants described above have an exercise price of $19.80 per share and expire seven years after the date of
issuance. In addition, on the Effective Date, CII retained a minority equity interest in reorganized Charter
Communications Holding Company, LLC (“Charter Holdco”) of 1% and a right to exchange such interest into new
Charter Class A common stock. On December 28, 2009, CII exchanged 81% of its interest in Charter Holdco, and
on February 8, 2010 the remaining interest was exchanged after which Charter Holdco became 100% owned by
Charter (the “Holdco Exchange”) and ownership of CII was transferred to Charter. The warrants and common stock
previously issued to CII were transferred to Mr. Allen in connection with the Holdco Exchange and transfer of CII’ s
ownership to Charter. In connection with the Plan, Mr. Allen transferred his preferred equity interest in CC VIII,
LLC (“CC VIII”) to Charter. Mr. Allen has the right to elect up to four of Charter's eleven board members.
On February 28, 2010, our former President and Chief Executive Officer, Neil Smit, resigned and our Chief
Operating Officer, Michael J. Lovett, assumed the additional title of Interim President and Chief Executive Officer.
On March 17, 2010, we announced that Charter Operating had received the required votes from lenders to amend its
existing $8.2 billion senior secured credit facilities to, among other things, allow for the creation of a new revolving
facility, the extension of maturities of a portion of the facilities and the amendment of certain other terms and
conditions. Upon the closing of these amendments, each of Bank of America, N.A. and JPMorgan Chase Bank,
N.A., for itself and on behalf of the lenders under the Charter Operating senior secured credit facilities, has agreed to
dismiss the pending appeal of our Confirmation Order pending before the District Court for the Southern District of
New York and to waive any objections to our Confirmation Order issued by the United States Bankruptcy Court for
the Southern District of New York. We expect to close on these transactions by March 31, 2010, subject to meeting
customary conditions.
The terms “CCH II,” “we,” “our” and “us,” when used in this report with respect to the period prior to CCH II’ s
emergence from bankruptcy, are references to the Debtors (“Predecessor”) and, when used with respect to the period
commencing after CCH II’ s emergence, are references to CCH II (“Successor”). These references include the parent
companies and subsidiaries of Predecessor or Successor, as the case may be, unless otherwise indicated or the
context requires otherwise.