Charter 2010 Annual Report Download - page 30

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Risk Factors.

We have a signicant amount of debt and may incur signicant
additional debt, including secured debt, in the future, which
could adversely affect our nancial health and our ability to
react to changes in our business.
We have a significant amount of debt and may (subject to applicable
restrictions in our debt instruments) incur additional debt in the
future. As of December 31, 2010, our total principal amount of debt
was approximately $12.3 billion.
Because of our significant indebtedness, our ability to raise additional
capital at reasonable rates, or at all, is uncertain, and the ability of
our subsidiaries to make distributions or payments to their parent
companies is subject to availability of funds and restrictions under
applicable debt instruments and under applicable law.
Our significant amount of debt could have other important
consequences. For example, the debt will or could:
make us vulnerable to interest rate increases, because
approximately 35% of our borrowings are, and may continue to
be, subject to variable rates of interest;
expose us to increased interest expense to the extent we refinance
existing debt, particularly our bank debt, with higher cost debt;
require us to dedicate a significant portion of our cash flow from
operating activities to make payments on our debt, reducing our
funds available for working capital, capital expenditures, and
other general corporate expenses;
limit our flexibility in planning for, or reacting to, changes in
our business, the cable and telecommunications industries, and
the economy at large;
place us at a disadvantage compared to our competitors that
have proportionately less debt;
adversely affect our relationship with customers and suppliers;
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limit our ability to borrow additional funds in the future, or to
access financing at the necessary level of the capital structure,
due to applicable financial and restrictive covenants in our debt;
make it more difficult for us to obtain financing;
make it more difficult for us to satisfy our obligations to the
holders of our notes and for us to satisfy our obligations to the
lenders under our credit facilities; and
limit future increases in the value, or cause a decline in the value
of our equity, which could limit our ability to raise additional
capital by issuing equity.
If current debt amounts increase, the related risks that we now face
will intensify.
The agreements and instruments governing our debt contain
restrictions and limitations that could signicantly affect our
ability to operate our business, as well as signicantly affect our
liquidity.
Our credit facilities and the indentures governing our debt contain
a number of significant covenants that could adversely affect our
ability to operate our business, our liquidity, and our results of
operations. ese covenants restrict, among other things, our and
our subsidiaries’ ability to:
incur additional debt;
repurchase or redeem equity interests and debt;
issue equity;
make certain investments or acquisitions;
pay dividends or make other distributions;
dispose of assets or merge;
enter into related party transactions; and
grant liens and pledge assets.
Additionally, the Charter Operating credit facilities require Charter
Operating to comply with a maximum total leverage covenant and a
maximum first lien leverage covenant. e breach of any covenants
or obligations in our indentures or credit facilities, not otherwise
waived or amended, could result in a default under the applicable
debt obligations and could trigger acceleration of those obligations,
which in turn could trigger cross defaults under other agreements
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