BRESNAN COMMUNICATIONS GROUP LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1999
(b) On February 2, 1999, the Company sold $170,000 aggregate principal amount
senior notes payable (the "Senior Notes"). In addition, on the same date,
the Company issued $275,000 aggregate principal amount at maturity of senior
discount notes, (the "Senior Discount Notes") for approximately $175,000
gross proceeds collectively (the "Notes").
The Senior Notes are unsecured and will mature on February 1, 2009. The
Senior Notes bear interest at 8% per annum payable semi-annually on
February 1 and August 1 of each year, commencing August 1, 1999.
The Senior Discount Notes are unsecured and will mature on February 1,
2009. The Senior Discount Notes were issued at a discount to their
aggregate principal amount at maturity and will accrete at a rate of
approximately 9.25% per annum, compounded semi-annually, to an aggregate
principal amount of $275,000 on February 1, 2004. Subsequent to February 1,
2004, the Senior Discount Notes will bear interest at a rate of 9.25% per
annum payable semi-annually in arrears on February 1 and August 1 of each
year, commencing August 1, 2004.
The Company may elect, upon not less than 60 days prior notice, to commence
the accrual of interest on all outstanding Senior Discount Notes on or
after February 1, 2002, in which case the outstanding principal amount at
maturity of each Senior Discount Note will on such commencement date be
reduced to the accreted value of such Senior Discount Note as of such date
and interest shall be payable with respect to the Senior Discount Notes on
each February and August 1 thereafter.
The Company may not redeem the Notes prior to February 1, 2004 except that
prior to February 1, 2002, the Company may redeem up to 35% of the Senior
Notes and Senior Discount Notes at redemption prices equal to 108% and 109%
of the applicable principal amount or accreted value. Subsequent to
February 1, 2004, the Company may redeem the Notes at redemption prices
declining annually from approximately 104% of the principal amount or
Bresnan Communications Group LLC and its wholly owned subsidiary Bresnan
Capital Corporation are the sole obligors of the Senior Notes and Senior
Discount Notes. Bresnan Communications Group LLC has no other assets or
liabilities other than its investment in its wholly owned subsidiary
Bresnan Telecommunications Company LLC. Bresnan Capital Corporation has no
other assets or liabilities.
Upon change of control of the Company, the holders of the notes have the
right to require the Company to purchase the outstanding notes at a price
equal to 101% of the principal amount or accrete value plus accrued and
BCG has entered into an interest rate swap agreement to effectively fix or
set a maximum interest rate on a portion of its floating rate long-term
debt. BCG is exposed to credit loss in the event of nonperformance by the
counterparties to the interest rate swap agreement.
At March 31, 1999, such Interest Rate Swap agreement effectively fixed or
set a maximum interest rate between 7.89% and 8.08% on an aggregate
notional principal amount of $110,000 which rate would become effective
upon the occurrence of certain events. The effect of the Interest Rate Swap
on interest expense for the three months ended March 31, 1998 and 1999 was
not significant. The expiration dates of the Interest Rate Swaps ranges
from August 25, 1999 to April 3, 2000. The difference between the fair
market value and book value of long-term debt and the Interest Rate Swap at
March 31, 1998 and 1999 is not significant.