Under most circumstances, acquisitions and investments may be made without
the consent of the lenders as long as our operating cash flow for the four
complete quarters preceding the acquisition or investment equals or exceeds 1.75
times the sum of our cash interest expense plus any restricted payments, on a
pro forma basis after giving effect to the acquisition or investment.
The credit facilities also contain a change of control provision, making it
an event of default, and permitting acceleration of the indebtedness, in the
event that either:
(1) Paul G. Allen, including his estate, heirs and certain other related
entities, fails to maintain a 51% direct or indirect voting and economic
interest in Charter Operating, provided that after the consummation of an
initial public offering by Charter Holdings or an affiliate of Charter Holdings,
the economic interest percentage may be reduced to 35%, or
(2) a change of control occurs under the indentures governing the notes.
The various negative covenants place limitations on our ability and the
ability of our subsidiaries to, among other things, incur debt, pay dividends,
incur liens, make acquisitions, investments or asset sales, or enter into
transactions with affiliates. Distributions by Charter Operating under the
credit facilities to Charter Holdings to pay interest on the notes are generally
permitted, except during the existence of a default under the credit facilities.
If the 8.250% notes are not refinanced prior to six months before their maturity
date, the entire amount outstanding of the credit facilities will become due and
payable. This summary is qualified in its entirety by reference to the credit
agreement and the related documents pertaining to the credit facilities.