Charter 2015 Annual Report Download - page 35

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20
Item 1A. Risk Factors.
Risks Related to Our Indebtedness
We have a significant amount of debt and may incur significant additional debt, including secured debt, in the future, which
could adversely affect our financial 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, 2015, our total principal amount of debt was approximately $35.9 billion, including $21.8 billion
of debt for which proceeds are held in escrow pending consummation of the TWC Transaction.
Our significant amount of debt could have consequences, such as:
• impact our ability to raise additional capital at reasonable rates, or at all;
• make us vulnerable to interest rate increases, because approximately 17% of our borrowings as of December 31, 2015
were, and may continue to be, subject to variable rates of interest;
• expose us to increased interest expense to the extent we refinance existing 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; and
• adversely affect our relationship with customers and suppliers.
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 significantly affect our
ability to operate our business, as well as significantly 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. These 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. The 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 governing our long-term indebtedness. In
addition, the secured lenders under the Charter Operating credit facilities, CCO Safari III credit facilities and the holders of the
CCO Safari II notes could foreclose on their collateral, which includes equity interests in our subsidiaries, and exercise other rights
of secured creditors.
We depend on generating sufficient cash flow to fund our debt obligations, capital expenditures, and ongoing operations.
We are dependent on our cash on hand and cash flow from operations to fund our debt obligations, capital expenditures and ongoing
operations.