rebuild and upgrade our existing plants. We also spend capital on plant
extensions, new services, converters and system maintenance. Historically, we
have been able to meet our capital requirements through our cash flows from
operations, equity contributions, debt financings and available borrowings under
our credit facilities.
Upgrading our existing plants will enable us to offer new and enhanced
services, including additional channels and tiers, expanded pay-per-view
options, high-speed Internet access, wide area network and point-to-point
services and digital advertising insertion. The upgrades will facilitate our new
services in two primary ways:
- Greater bandwidth allows us to send more information through our systems.
This provides us with the "space" to provide new services in addition to
our current services. As a result, we will be able to roll out digital
cable programming in addition to existing analog channels offered to
customers who do not wish to subscribe to a package of digital services.
- Enhanced design configured for two-way communication with the customer
allows us to provide cable Internet services without telephone support
and other interactive services such as an interactive program guide,
impulse pay-per-view, video-on-demand and Wink that cannot be offered
without upgrading the bandwidth capacity of our systems.
We also believe our upgraded systems will provide enhanced picture quality
and system reliability.
Over the next three years, we plan to spend $1.8 billion for capital
expenditures, approximately $900 million of which will be used to upgrade our
systems to bandwidth capacity of 550 megahertz or greater so that we may offer
advanced service, and the remaining $900 million will be used for plant
extensions, new services, converters and system maintenance. Capital
expenditures for 1999, 2000 and 2001 are expected to be approximately $600
million, $650 million, and $550 million, respectively. If our recent pending
acquisitions are completed over the next three years, we plan to spend an
additional $700 million for capital bandwidth capacity of 550 megahertz or
greater so that we may offer advanced cable services and $400 million will be
used for plant extensions, new services, converters and system maintenance. We
expect to finance the anticipated capital expenditures with distributions
generated from operations and additional borrowings under our credit facilities.
For the three months ended March 31, 1999, Charter Holdings made capital
expenditures, excluding the acquisitions of cable television systems, of $109.6
million and $29.0 million for all of 1998.
On March 17, 1999, Charter Holdings issued $600 million in principal amount
of 8.250% notes, $1.5 billion in principal amount of 8.625% notes and $1.475
billion outstanding under 9.920% notes. The net proceeds of approximately $3.0
billion, combined with the borrowings under our credit facilities, were used to
consummate the tender offers for publicly held debt of several of our
subsidiaries, as described below, refinance borrowings under our previous credit
facilities and for working capital purposes. Semi-annual interest payments with
respect to the 8.250% and 8.625% notes will be approximately $89.4 million,
commencing on October 1, 1999. No interest on the 9.920% notes will be payable
prior to April 1, 2004. Thereafter, semiannual interest payments will be
approximately $162.6 million in the aggregate, commencing on October 1, 2004.