RIFKIN ACQUISITION PARTNERS, L.L.L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1998, the reducing revolving loan agreement was amended to revise the scheduled
reduction in revolving commitments. The additional financing amounts available
at December 31, 1998 and 1997 were $45,000,000 and $52,500,000, respectively. At
December 31, 1998, the full $20,000,000 available had been borrowed, and
$15,000,000 had been drawn against the $45,000,000 commitment. At December 31,
1997, the full $20,000,000 available had been borrowed, and $16,500,000 had been
drawn against the $52,500,000 commitment. The amount available for borrowing
will decrease annually during its term with changes over the four years
following December 31, 1998 as follows: 1999 -- $2,500,000 reduction per
quarter, and 2000 through 2002 -- $3,625,000 per quarter. Any unpaid balance is
due on March 31, 2003. The revolving loan bears an interest rate of either the
bank's prime rate plus .25% to 1.75% or LIBOR plus 1.5% to 2.75%. The specific
rate is dependent upon the senior funded debt ratio which is recalculated
quarterly. The weighted average effective interest rates at December 31, 1998
and 1997 was 8.08% and 8.29%, respectively. The reducing revolving loan includes
a commitment fee of 1/2% per annum on the unborrowed balance.
Certain mandatory prepayments may also be required, commencing in fiscal
1997, on the Tranche A term loan, the Tranche B term loan, and the reducing
revolving credit based on the Company's cash flow calculations, proceeds from
the sale of a cable system or equity contributions. Based on the 1998
calculation and the Michigan sale, $3,425,000 of prepayments were required.
Optional prepayments are allowed, subject to certain restrictions. The related
loan agreement contains covenants limiting additional indebtedness, dispositions
of assets, investments in securities, distribution to partners, management fees
and capital expenditures. In addition, the Company must maintain certain
financial levels and ratios. At December 31, 1998, the Company was in compliance
with these covenants.
The Company also has $3,000,000 of senior subordinated debt payable to a
Rifkin Partner. The debt has a scheduled maturity, interest rate and interest
payment schedule identical to that of the Notes, as discussed above.
Based on the outstanding debt as of December 31, 1998, the minimum
aggregate maturities for the five years following 1998 are none in 1999,
$7,500,000 in 2000, $16,500,000 in 2001, $23,075,000 in 2002 and $29,500,000 in
7. RELATED PARTY TRANSACTIONS
The Company entered into a management agreement with Rifkin & Associates,
Inc. (Rifkin). The management agreement provides that Rifkin will act as manager
of the Company's CATV systems and be entitled to annual compensation of 3.5% of
the Company's revenue. Effective September 1, 1998, Rifkin conveyed its CATV
management business to R & A Management, LLC (RML). The result of this
transaction included the conveyance of the Rifkin management agreement (Rifkin
Agreement) to RML (RML Agreement). Expenses incurred pursuant to the Rifkin
Agreement and the RML Agreement are disclosed in total on the Consolidated
Statement of Operations.
The Company is associated with a company to purchase certain cable
television programming at a discount. Rifkin acted as the agent and held the
deposit funds required for the Company to participate.