intend to finance the Falcon change of control offers with a portion of the
proceeds of the sale of the original notes.
The Falcon debentures are joint and several senior unsecured obligations of
the issuers. The Falcon debentures are the obligations of the issuers only, and
the issuers' subsidiaries do not have any obligation to pay any amounts due
under the Falcon debentures. Therefore, the Falcon debentures are effectively
subordinated to all existing and future liabilities of the issuers'
Among other restrictions, the indentures governing the Falcon debentures
contain certain limitations on the issuers' and their specified subsidiaries'
- incur additional debt;
- make restricted payments or certain investments;
- create certain liens;
- create or permit to exist dividend or payment restrictions on restricted
- sell all or substantially all of their assets or merge with or into other
- engage in sale-leaseback transactions;
- invest in unrestricted subsidiaries and affiliates;
- issue or sell equity interests of restricted subsidiaries;
- pay dividends or make any other distributions on any equity interests;
- redeem equity interests; and
- guarantee any debt which is equal or subordinate in right of payment to
the Falcon debentures.
The Falcon debentures contain events of default that include a
cross-default provision triggered by the failure of CC VII Holdings, LLC or any
specified subsidiary to make payment on debt with a total amount in excess of
$25 million or the acceleration of debt of this amount prior to maturity.
As of December 31, 1999, there was $375 million total principal amount
outstanding on the Falcon 8.375% debentures, and the accreted value of the
Falcon 9.285% debentures was $323.0 million.
THE AVALON 11.875% NOTES. On December 10, 1998, CC V Holdings, LLC,
formerly known as Avalon Cable LLC, and CC V Holdings Finance, Inc. (formerly
Avalon Cable Holdings Finance, Inc.) jointly issued $196 million total principal
amount at maturity of 11.875% senior discount notes due 2008. On July 22, 1999,
the issuers exchanged $196 million of the original issued and outstanding Avalon
11.875 % notes for an equivalent amount of new Avalon 11.875% notes. The form
and terms of the new Avalon 11.875% notes are substantially identical to the
original Avalon 11.875% notes except that they are registered under the
Securities Act and, therefore, are not subject to the same transfer
The Avalon 11.875% notes are guaranteed by certain subsidiaries of CC V
There will be no current payments of cash interest on the Avalon 11.875%
notes before December 1, 2003. The Avalon 11.875% notes accrete in value at a
rate of 11.875% per annum,