The Charter Operating credit facilities provide Charter Operating with two
interest rate options, to which a margin is added: a base rate option,
generally, the "prime rate" of interest, and an interest rate option based on an
interbank eurodollar rate. The Charter Operating credit facilities contain
representations and warranties, affirmative and negative covenants, information
requirements, events of default and financial covenants. The financial
covenants, which are generally tested on a quarterly basis, measure performance
against standards set for leverage, debt service coverage, and operating cash
flow coverage of cash interest expense.
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 Charter Operating 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) Mr. 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 25%, 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 such credit
facilities. If the 8.250% notes are not refinanced prior to six months before
their maturity date, the entire amount outstanding of the Charter Operating
credit facilities will become due and payable.
The original Renaissance notes and new Renaissance notes were issued by
Renaissance Media (Louisiana) LLC, Renaissance Media (Tennessee) LLC and
Renaissance Media Capital Corporation, with Renaissance Media Group LLC as the
guarantor, and the United States Trust Company of New York as the trustee.
Renaissance Media Group, which is the direct or indirect parent company of these
issuers, is now a subsidiary of Charter Operating. The Renaissance notes and the
Renaissance guarantee are unsecured, unsubordinated debt of the issuers and the
guarantor, respectively. In October 1998, the issuers exchanged $163.175 million
of the original issued and outstanding 10% senior discount notes due 2008 for an
equivalent value of 10% senior discount notes due April 15, 2008. The form and
terms of the new Renaissance notes are the same in all material respects as the
form and terms of the original Renaissance notes except that the issuance of the
new Renaissance notes have been registered under the Securities Act.
There will not be any payment of interest in respect of the Renaissance
notes prior to October 15, 2003. Interest on the new Renaissance notes shall be
paid semi-annually in cash at a rate of 10% per annum beginning on October 15,
2003. The new Renaissance