Charter 2011 Annual Report Download - page 105

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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- 21
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 currently outstanding 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 aggregate principal amounts in excess of $100 million;
• 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 aggregate principal amounts in excess of $200 million;
• the consummation of any transaction resulting in any person or group having power, directly or indirectly, to vote more
than 50% of the ordinary voting power for the management of Charter Operating on a fully diluted basis or a change of
control shall occur under any indebtedness of CCO Holdings, any first lien notes of Charter Operating or any specified
long-term indebtedness of Charter Operating (as defined in the Credit Agreement) in excess of $200 million in aggregate
principal amount with the CCO Holdings credit facilities containing a 35% beneficial ownership change of control
provision; and
• Charter Operating ceasing to be a wholly-owned direct subsidiary of CCO Holdings, except in certain limited
circumstances.
Limitations on Distributions
Distributions by the Company’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,
2011, there was no default under any of these indentures or credit facilities. 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 only be made if they have “surplus” as defined in the Delaware Limited Liability Company Act.
Liquidity and Future Principal Payments
The Company continues to have significant amounts of debt, and its business requires significant cash to fund principal and interest
payments on its debt, capital expenditures and ongoing operations. 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 free cash flow and cash on hand to further extend or reduce the maturities of its principal
obligations. The timing and terms of any refinancing transactions will be subject to market conditions.