Charter 2009 Annual Report Download - page 73

CCH II, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009, 2008, AND 2007
(dollars in millions, except where indicated)
F-25
The Charter Operating credit facilities also allow the Company to enter into incremental term loans in the future
with an aggregate amount of up to an additional $500 million, 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. Although the Charter Operating credit facilities allow for the incurrence of up to an additional $500 million in
incremental term loans, no assurance can be given that additional incremental term loans could be obtained in the
future 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 LIBOR (0.26% as of December 31, 2009 and 1.46% to 3.50% as of December 31, 2008), as defined,
plus a margin for LIBOR loans of 2.00% for the revolving credit facility and for the term loan. The current
incremental term loan bears interest at LIBOR plus 5.0%, with a LIBOR floor of 3.5% or at Charter Operating’ s
election, a base rate (3.25% at December 31, 2009) plus a margin of 4.00%. Charter Operating has currently elected
the base rate for the incremental term loan.
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 subsidiaries, as well as intercompany obligations
owing to it by any of such entities.
Credit Facilities — Restrictive Covenants
Charter Operating Credit Facilities
The Charter Operating credit facilities contain representations and warranties, and affirmative and negative
covenants customary 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 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 Charter Operating credit
facilities permit Charter Operating and its subsidiaries to make distributions to pay interest on the subordinated and
parent company indebtedness, provided that, among other things, no default has occurred and is continuing under
the Charter Operating credit facilities.
The events of default under the Charter Operating credit facilities include, among other things:
• the failure to make payments when due or within the applicable grace period,
• the failure to comply with specified covenants, including but not limited to a covenant to deliver audited
financial statements for Charter Operating with an unqualified opinion from the Company’ s independent
accountants and without a “going concern” or like qualification or exception.
• the failure to pay or the occurrence of events that cause or permit the acceleration of other indebtedness
owing by CCO Holdings, Charter Operating, or Charter Operating’ s subsidiaries in amounts in excess of
$100 million in aggregate principal amount,
• the failure to pay or the occurrence of events that result in the acceleration of other indebtedness owing by
certain of CCO Holdings’ direct and indirect parent companies in amounts in excess of $200 million in
aggregate principal amount,
• Mr. Allen and/or certain of his family members and/or their exclusively owned entities (collectively, the
“Paul Allen Group”) ceasing to have the power, directly or indirectly, to vote at least 35% of the ordinary
voting power for the management of Charter Operating on a fully diluted basis,
• the consummation of any transaction resulting in any person or group (other than the Paul Allen Group)
having power, directly or indirectly, to vote more than 35% of the ordinary voting power for the