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SEC Filings

S-4
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4 on 04/01/1999
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Covenants" sections of this prospectus. Events beyond the control of the
Operating Companies may affect their ability to meet these ratios and tests. We
cannot assure you that the Operating Companies will meet these ratios or these
tests.
 
   Our failure to comply with the obligations in the indenture governing the
Senior Subordinated Notes, the indenture governing the old notes and the new
notes and the Issuers' senior secured credit facility could result in an event
of default under such agreements. An event of default could permit acceleration
of the related debt and could also permit the acceleration of debt under other
instruments that may contain cross-acceleration or cross-default provisions. In
this event, lenders under these instruments could declare all amounts
outstanding to be immediately due and payable. In addition, in the case of the
credit facility and any other secured debt, the lenders thereunder could
foreclose upon the secured assets. We cannot assure you that the assets of the
Issuers and the Operating Companies would be sufficient to repay the debt of
the Issuers and the Operating Companies, including the new notes and the Senior
Subordinated Notes, if the lenders under the credit facility accelerated their
debt. In addition, the Issuers and their subsidiaries may incur other debt in
the future that may contain more restrictive covenants than those currently
applicable.
 
The Issuers are holding companies and rely on dividends from their subsidiaries
to pay amounts due under the new notes.
 
   The Issuers are holding companies with no significant assets other than
their direct and indirect investments in their operating subsidiaries,
including the Operating Companies. The Issuers will be the sole obligors on the
new notes. The new notes will not be guaranteed by any subsidiary of the
Issuers, including the Operating Companies, or secured by any of the Issuers'
assets. Therefore, the new notes will be effectively subordinated to all debt
and other liabilities of the Issuers' subsidiaries, including the Operating
Companies. Claims of creditors of the Issuers' subsidiaries, including general
trade creditors, will generally have priority as to the assets of the Issuers'
subsidiaries over the claims of the Issuers and the holders of the new notes.
As of December 31, 1998, on a pro forma basis, the Issuer's subsidiaries,
including the Operating Companies, would have had $441.7 million of debt
outstanding, including debt under the Senior Subordinated Notes and the credit
facility, and $17.4 million of trade payables and other liabilities
outstanding.
 
   The Issuers will rely on dividends and other advances and transfers of funds
from their subsidiaries, including the Operating Companies, as the sole source
of funds to meet their debt service obligations under the new notes. The
ability of the Issuers' subsidiaries to pay such dividends and make such
advances and transfers will be subject to applicable state laws restricting the
payment of dividends and to restrictions in the credit facility, the indenture
under which the Senior Subordinated Notes were issued, and other agreements
governing indebtedness of the Issuers' subsidiaries. Subject to certain
conditions, the credit facility and the indenture governing the Senior
Subordinated Note permit the Issuers' subsidiaries to make distributions to the
Issuers in amounts sufficient for the Issuers to pay interest, including the
Accreted Interest Redemption Amount, when due on the new notes. We cannot
assure you that such conditions will be satisfied at the time the Accreted
Interest Redemption Amount or other interest payments under the new notes are
payable. See "Description of Certain Debt."
 
We have a limited operating history and our business plan may be unsuccessful.
 
   Our company was formed in 1997 and has grown principally through
acquisitions. We acquired a substantial portion of our operations in early
November 1998 in the Cable Michigan transaction. Accordingly, you have limited
information about our combined operations and the results that we can achieve
through our management. You also have limited information upon which you can
evaluate the Issuers' performance and your investment in the new notes. We
cannot assure you that we will succeed at effectively managing our various
cable systems or the systems that we plan to acquire. Our failure to achieve
expected benefits from the combination of our various cable systems or to
successfully integrate acquired entities could materially affect the Issuers'
results of operations. We cannot assure you that the past operating history of
any or all of the entities that we have acquired will be indicative of our
future results.
 
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