Charter 2009 Annual Report Download - page 74

CCH II, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009, 2008, AND 2007
(dollars in millions, except where indicated)
F-26
management of Charter Operating on a fully diluted basis, unless the Paul Allen Group holds a greater
share of ordinary voting power for the management of Charter Operating, and
• Charter Operating ceasing to be a wholly-owned direct subsidiary of CCO Holdings, except in certain very
limited circumstances.
CCO Holdings Credit Facility
The CCO Holdings credit facility contains covenants that are substantially similar to the restrictive covenants for the
CCO Holdings 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, 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.
Limitations on Distributions
Distributions by Charter’ s subsidiaries to a parent company for payment of principal on parent company notes are
restricted under the indentures and credit facilities discussed above, unless there is no default under the applicable
indenture and credit facilities, and unless each applicable subsidiary’ s leverage ratio test is met at the time of such
distribution. As of December 31, 2009, there was no default under any of these indentures or credit facilities.
However, certain of the Company’ s subsidiaries did not meet their applicable leverage ratio tests based on
December 31, 2009 financial results. As a result, distributions from certain of Charter’ s subsidiaries to their parent
companies would have been restricted at such time and will continue to be restricted unless those tests are met.
Distributions by Charter Operating for payment of principal on parent company notes are further restricted by the
covenants in its credit facilities
Distributions by CCO Holdings and Charter Operating to a parent company for payment of parent company interest
are permitted if there is no default under the aforementioned indentures and CCO Holdings and Charter Operating
credit facilities.
In addition to the limitation on distributions under the various indentures discussed above, distributions by the
Company’ s subsidiaries may be limited by applicable law, including the Delaware Limited Liability Company Act,
under which the Company’ s subsidiaries may only make distributions if they have “surplus” as defined in the act.
Liquidity and Future Principal Payments
The Company has a significant amount of debt, and its business requires significant cash to fund principal and
interest payments on its debt, capital expenditures and ongoing operations. The Company has funded its cash
requirements through cash flows from operating activities, borrowings under its credit facilities, proceeds from sales
of assets, issuances of debt and equity securities, and cash on hand. Upon filing bankruptcy and continuing under
the Plan as consummated, Charter Operating no longer has access to the revolving feature of its revolving credit
facility and will rely on cash on hand and cash flows from operating activities to fund its projected operating cash
needs. As set forth below, the Company has significant future principal payments beginning in 2012 and beyond.
The Company continues to monitor the capital markets, and it expects to undertake refinancing transactions and
utilize cash flows from operating activities and cash on hand to further extend or reduce the maturities of its
principal obligations.