Charter 2015 Annual Report Download - page 117

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, 2014 AND 2013
(dollars in millions, except share or per share data or where indicated)
F- 20
CCO Safari II Notes
In July 2015, CCO Safari II, a wholly owned subsidiary of the Company, closed on transactions in which it issued $15.5 billion
in aggregate principal amount of senior secured notes comprised of $2.0 billion aggregate principal amount of 3.579% senior
secured notes due 2020, $3.0 billion aggregate principal amount of 4.464% senior secured notes due 2022, $4.5 billion aggregate
principal amount of 4.908% senior secured notes due 2025, $2.0 billion aggregate principal amount of 6.384% senior secured
notes due 2035, $3.5 billion aggregate principal amount of 6.484% senior secured notes due 2045 and $500 million aggregate
principal amount of 6.834% senior notes due 2055. The net proceeds from the issuance of the CCO Safari II notes were deposited
into an escrow account, included in restricted cash and cash equivalents on the consolidated balance sheet as of December 31,
2015, and will be used to partially finance the TWC Transaction as well as for general corporate purposes. The release of the
proceeds to the Company is subject to satisfaction of certain conditions, including the closing of the TWC Transaction. Upon
release of the proceeds, CCO Safari II will merge into Charter Operating and the CCO Safari II notes will become obligations of
Charter Operating and Charter Communications Operating Capital Corp. Contingent upon closing of the TWC Transaction and
release of the proceeds from escrow, the Company will be obligated to pay approximately $143 million of additional debt issuance
fees. Should the Merger Agreement be terminated prior to the consummation of the TWC Transaction, or upon expiration of the
escrow agreement on May 23, 2016 (or six months following such date in the event of an extension of the Merger Agreement),
such amounts placed in escrow must be used to settle any outstanding CCO Safari II notes at a price of 101% of the aggregate
principal amount.
Upon release of the proceeds from escrow, the CCO Safari II notes will be senior debt obligations of Charter Operating and Charter
Communications Operating Capital Corp. and will be guaranteed by CCO Holdings and Charter Operating's subsidiaries. In
addition, the CCO Safari II notes will be secured by a perfected first priority security interest in substantially all of the assets of
Charter Operating to the extent such liens can be perfected under the Uniform Commercial Code by the filing of a financing
statement and the liens will rank equally with the liens on the collateral securing obligations under the Charter Operating credit
facilities. Upon release of the proceeds from escrow, Charter Operating may redeem some or all of the CCO Safari II notes at any
time at a premium.
CCO Safari II Notes - Restrictive Covenants
The CCO Safari II notes are subject to the terms and conditions of the indenture governing the CCO Safari II notes as well as a
separate escrow agreement until Charter Operating re-assumes its obligations for the CCO Safari II notes. The CCO Safari II
notes contain customary representations and warranties and affirmative covenants with limited negative covenants. As required
by the CCO Safari II indenture, CCO Safari II and Bank of America, N.A, as escrow agent, entered into an escrow agreement
pursuant to which, CCO Safari II is required to maintain an escrow account over which the administrative agent has a perfected
first priority security interest on behalf of the CCO Safari II notes holders. The events of default under the CCO Safari II indenture
include, among others, the failure to make payments when due or within the applicable grace period.
CCO Safari III Credit Facilities
In August 2015, Charter Operating closed on a new term loan H facility ("Term H Loan") and a new term loan I facility ("Term I
Loan") totaling an aggregate principal amount of $3.8 billion pursuant to the terms of Charter Operating’s Amended and Restated
Credit Agreement dated April 11, 2012 (the “Credit Agreement”). The Term H Loan was issued at a principal amount of $1.0
billion and matures in 2021. Pricing on the Term H Loan was set at LIBOR plus 2.50% with a LIBOR floor of 0.75% and issued
at a price of 99.75% of the aggregate principal amount. The Term I Loan was issued at a principal amount of $2.8 billion and
matures in 2023. Pricing on the Term I Loan was set at LIBOR plus 2.75% with a LIBOR floor of 0.75% and issued at a price of
99.75% of the aggregate principal amount. The CCO Safari III credit facilities form a portion of the debt financing to be used to
fund the cash portion of the TWC Transaction. Charter Operating assigned all of its obligations with respect to the CCO Safari III
credit facilities and transferred all of the proceeds from the CCO Safari III credit facilities to CCO Safari III, and CCO Safari III
placed the funds in an escrow account, included in restricted cash and cash equivalents on the consolidated balance sheet as of
December 31, 2015, pending the closing of the TWC Transaction, at which time, subject to certain conditions, Charter Operating
will re-assume the obligations in respect of the CCO Safari III credit facilities under the Credit Agreement. Contingent upon
closing of the TWC Transaction and release of the proceeds from escrow, Charter will be obligated to pay approximately $34
million of additional debt issuance fees. Should the TWC Transaction be terminated, such amounts placed into escrow will be
used to settle any outstanding CCO Safari III credit facilities at a price of 99.75% of the aggregate principal amount.