Charter 2012 Annual Report Download - page 65

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governing each of the notes issued are complicated and you should consult such agreements and instruments for more detailed
information regarding the notes issued.
The notes issued by CCO Holdings (the “note issuer”) were issued pursuant to indentures that contain covenants that restrict the
ability of the note issuer and its subsidiaries to, among other things:
• incur indebtedness;
• pay dividends or make distributions in respect of capital stock and other restricted payments;
• issue equity;
• make investments;
• create liens;
• sell assets;
• consolidate, merge, or sell all or substantially all assets;
• enter into sale leaseback transactions;
• create restrictions on the ability of restricted subsidiaries to make certain payments; or
• enter into transactions with affiliates.
However, such covenants are subject to a number of important qualifications and exceptions. Below we set forth a brief summary
of certain of the restrictive covenants.
Restrictions on Additional Debt
The limitations on incurrence of debt and issuance of preferred stock contained in various indentures permit the note issuer and
its restricted subsidiaries to incur additional debt or issue preferred stock, so long as, after giving pro forma effect to the incurrence,
the leverage ratio would be below a specified level for the note issuer. The leverage ratios under our notes for CCO Holdings is
6.0 to 1.
In addition, regardless of whether the leverage ratio could be met, so long as no default exists or would result from the incurrence
or issuance, the note issuer and its restricted subsidiaries are permitted to issue among other permitted indebtedness:
• up to $1.5 billion of debt under credit facilities not otherwise allocated
• up to the greater of $300 million and 5% of consolidated net tangible assets to finance the purchase or capital lease of
new assets;
• up to the greater of $300 million and 5% of consolidated net tangible assets of additional debt for any purpose; and
• other items of indebtedness for specific purposes such as intercompany debt, refinancing of existing debt, and interest
rate swaps to provide protection against fluctuation in interest rates.
Indebtedness under a single facility or agreement may be incurred in part under one of the categories listed above and in part under
another, and generally may also later be reclassified into another category including as debt incurred under the leverage ratio.
Accordingly, indebtedness under our credit facilities may be incurred under a combination of the categories of permitted
indebtedness listed above. The restricted subsidiaries of the note issuer are generally not permitted to issue subordinated debt
securities.
Restrictions on Distributions
Generally, under the various indentures, CCO Holdings and its respective restricted subsidiaries are permitted to pay dividends
on or repurchase equity interests, or make other specified restricted payments, only if it can incur $1.00 of new debt under the 6.0
to 1.0 leverage ratio test after giving effect to the transaction and if no default exists or would exist as a consequence of such
incurrence. If those conditions are met, restricted payments may be made in a total amount of up to the sum of 100% of CCO
Holdings’ Consolidated EBITDA, as defined, minus 1.3 times its Consolidated Interest Expense, as defined, cumulatively from
April 1, 2010, plus 100% of new cash and appraised non-cash equity proceeds received by CCO Holdings and not allocated to
certain investments, cumulatively from the issue date, plus $2 billion.
In addition, CCO Holdings may make distributions or restricted payments, so long as no default exists or would be caused by
transactions among other distributions or restricted payments:
• to repurchase management equity interests in amounts not to exceed $10 million per fiscal year;
• to pay pass-through tax liabilities in respect of ownership of equity interests in the applicable issuer or its restricted
subsidiaries; or