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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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   The credit facility provides for mandatory prepayments and commitment
reductions (in each case subject to certain exceptions and/or thresholds) out
of net cash proceeds from issuances of capital stock, the incurrence of
indebtedness, certain asset sales, insurance proceeds and excess cash flow.
Voluntary prepayments are permitted in whole or in part at the option of the
Borrowers, in minimum principal amounts, without premium or penalty (except
that Tranche B Term Loans must be prepaid, at 102% and 101% of the principal
amount thereof, for the first year and second year, respectively), subject to
reimbursement of certain of the Senior Lenders' costs under certain conditions.
 
   The credit facility provides that the Borrowers must meet or exceed a
consolidated interest coverage ratio, fixed charge coverage ratio and debt
service coverage ratio and must not exceed certain consolidated leverage
ratios, each as set forth in the credit facility. The credit facility also
contains customary affirmative covenants, including, required interest rate
protection arrangements and the pledge of additional collateral in certain
circumstances, and certain negative covenants, including covenants that limit
certain indebtedness, liens, fundamental changes, disposition of property,
restricted payments (including distributions to the Issuers of amounts to pay
the Accreted Interest Redemption Amount and other interest payments on the
Senior Discount Notes), capital expenditures, investments, optional payments
and modifications of debt instruments (including the indenture governing the
Old Notes and New Notes and the Senior Subordinated Notes), transactions with
affiliates and sales and leasebacks. In particular, under the credit facility,
the Operating Companies may pay cash dividends to the Issuers to allow payments
of interest (including the Accreted Interest Redemption Amount) on the Senior
Discount Notes so long as no Default (as defined in the credit facility) or
Event of Default (as defined in the credit facility) shall have occurred and be
continuing or would occur as a result thereof and a consolidated leverage ratio
test is satisfied. The credit facility also includes customary events of
default.
 
   The obligations of the Borrowers under the credit facility are secured by
substantially all the assets of the Borrowers. In addition, the obligations of
the Borrowers under the credit facility are guaranteed by each of the Issuers,
Avalon, Avalon New England Holdings and Avalon Michigan Inc. None of the
guarantors have significant assets other than their investments in affiliates.
 
The Senior Subordinated Notes
 
   On December 3, 1998, Avalon Cable of Michigan, Inc. ("Avalon Michigan
Inc."), Avalon Cable of New England LLC ("Avalon New England") and Avalon Cable
Finance, Inc. ("Avalon Finance") issued $150.0 million aggregate principal
amount of their 9 3/8% Senior Subordinated Notes due 2008. The Senior
Subordinated Notes were issued under an indenture dated as of December 10, 1998
(the "Senior Subordinated Note Indenture") by and among Avalon New England,
Avalon Finance and Avalon Cable of Michigan LLC ("Avalon Michigan LLC"), as
issuers, and The Bank of New York, as trustee.
 
   In the Reorganization, Avalon Michigan Inc. ceased to be obligated as an
issuer under the Senior Subordinated Notes and became a guarantor of Avalon
Michigan LLC's obligations under the Senior Subordinated Notes. Thus, the
obligors under the Senior Subordinated Notes are currently Avalon New England,
Avalon Finance and Avalon Michigan LLC, which we refer to collectively as the
Senior Subordinated Note Issuers. Avalon Michigan LLC does not have significant
assets or liabilities, other than its equity interest in Avalon Holdings.
 
   The Senior Subordinated Notes are general unsecured obligations of the
Senior Subordinated Note Issuers and are subordinated in right of payment to
all current and future senior indebtedness of the Senior Subordinated Note
Issuers, including indebtedness under the credit facility. Interest on the
Senior Subordinated Notes accrues at the rate of 9.375% per annum and is
payable semi-annually in arrears on June 1 and December 1 of each year, to
holders of record on the immediately preceding May 15 and November 15. The
Senior Subordinated Notes are limited in aggregate principal amount to $200.0
million, of which $150.0 million was issued in the initial Senior Subordinated
Note offering. The remaining $50.0 million may be issued from time to time,
subject to compliance with the debt incurrence covenants in the Senior
Subordinated Note Indenture, the indenture governing the old notes and the new
notes and the financial covenants in the credit facility.
 
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