Charter 2011 Annual Report Download - page 102

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011, 2010 AND 2009
(dollars in millions, except share or per share data or where indicated)
F- 18
were used, along with borrowings under the Charter Operating credit facilities, to finance the tender offers in which $407 million
aggregate principal amount of Charter Operating's outstanding 8.00% senior second-lien notes due 2012, $234 million aggregate
principal amount of Charter Operating's 10.875% senior second-lien notes due 2014 and $286 million aggregate principal amount
of CCH II's 13.50% senior notes due 2016 were repurchased. These transactions resulted in a loss on extinguishment of debt for
the year ended December 31, 2011 (Successor) of approximately $19 million.
In January 2012, CCO Holdings and CCO Holdings Capital Corp. closed on transactions in which they issued $750 million
aggregate principal amount of 6.625% senior notes due 2022. The notes were issued at a price of 99.5% of the aggregate principal
amount. The net proceeds of the notes were used, along with a draw on the $500 million delayed draw portion of the Charter
Operating Term Loan A facility, to repurchase $300 million aggregate principal amount of Charter Operating's outstanding 8.00%
senior second-lien notes due 2012, $294 million aggregate principal amount of Charter Operating's 10.875% senior second-lien
notes due 2014 and $334 million aggregate principal amount of CCH II's 13.50% senior notes due 2016, as well as to repay amounts
outstanding under the Company's revolving credit facility. The tender offers closed in January and February 2012 and the Company
expects to record a loss on extinguishment of debt of approximately $15 million on this transaction in the first quarter of 2012.
The CCO Holdings notes are guaranteed by Charter. They are senior debt obligations of CCO Holdings and CCO Holdings Capital
Corp. and rank equally with all other current and future unsecured, unsubordinated obligations of CCO Holdings and CCO Holdings
Capital Corp. The CCO Holdings notes are structurally subordinated to all obligations of subsidiaries of CCO Holdings, including
the Charter Operating notes and Charter Operating credit facilities.
CCO Holdings may redeem some or all of the CCO Holdings notes at any time at a premium. The optional redemption price
declines to 100% of the respective series’ principal amount, plus accrued and unpaid interest, if any, on or after varying dates in
2015 through 2018.
In addition, at any time prior to varying dates in 2013 through 2015, CCO Holdings may redeem up to 35% of the aggregate
principal amount of the notes at a redemption price at a premium plus accrued and unpaid interest to the redemption date, with
the net cash proceeds of one or more equity offerings (as defined in the indenture); provided that certain conditions are met.
In the event of specified change of control events, CCO Holdings must offer to purchase the outstanding CCO Holdings notes
from the holders at a purchase price equal to 101% of the total principal amount of the notes, plus any accrued and unpaid interest.
Charter Operating Notes
In August 2011, Charter Operating repurchased, in private transactions, a total of $193 million principal amount of Charter Operating
8.00% senior second-lien notes due 2012 for approximately $199 million cash. The transactions resulted in a loss on extinguishment
of debt of approximately $4 million for the year ended December 31, 2011 (Successor).
In February 2012, Charter Operating provided a notice of redemption to redeem all of the remaining 10.875% senior notes due
2014.
The Charter Operating notes are senior debt obligations of Charter Operating and Charter Communications Operating Capital
Corp. To the extent of the value of the collateral (but subject to the prior lien of the credit facilities), they rank effectively senior
to all of Charter Operating’s future unsecured senior indebtedness. The collateral currently consists of the capital stock of Charter
Operating held by CCO Holdings, all of the intercompany obligations owing to CCO Holdings by Charter Operating or any
subsidiary of Charter Operating, and substantially all of Charter Operating’s and the guarantors’ assets (other than the assets of
CCO Holdings). CCO Holdings and those subsidiaries of Charter Operating that are guarantors of, or otherwise obligors with
respect to, indebtedness under the Charter Operating credit facilities and related obligations, guarantee the Charter Operating
notes.
Charter Operating may, at any time and from time to time, at their option, redeem the outstanding 8.00% second-lien notes due
2012, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the redemption date, plus the Make-Whole Premium. The Make-Whole Premium is an amount equal to the excess of
(a) the present value of the remaining interest and principal payments due on the 8% senior second-lien note due 2012 to its final
maturity date, computed using a discount rate equal to the Treasury Rate on such date plus 0.50% , over (b) the outstanding principal
amount of such note.