The new notes, like the old notes, entail the following risks. You should
carefully consider these risk factors, as well as the other information in this
prospectus, before tendering original notes in exchange for new notes.
WE HAVE SUBSTANTIAL EXISTING DEBT AND WILL INCUR SUBSTANTIAL ADDITIONAL DEBT
WHICH COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING
OUR OBLIGATIONS UNDER THE NOTES.
We have a significant amount of debt. As of June 30, 1999, pro forma for
our pending acquisitions and recent acquisitions completed since that date, our
total debt was approximately $6.7 billion, our total member's equity was
approximately $4.5 billion, and the deficiency of our earnings available to
cover fixed charges was approximately $375 million.
Our significant debt could have important consequences to you. For example,
- make it more difficult for us to satisfy our obligations to you with
respect to the notes and to satisfy our obligations under our credit
- increase our vulnerability to general adverse economic and cable industry
conditions, including interest rate fluctuations, because much of our
borrowings are and will continue to be at variable rates of interest;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, which will reduce our funds available
for working capital, capital expenditures, acquisitions of additional
systems and other general corporate expenses;
- limit our flexibility in planning for, or reacting to, changes in our
business and the cable industry generally;
- place us at a disadvantage compared to our competitors that have
proportionately less debt; and
- limit our ability to borrow additional funds in the future, if we need
them, due to applicable financial and restrictive covenants in such debt.
We anticipate incurring significant additional debt in the future to fund
the expansion, maintenance and the upgrade of our systems. If new debt is added
to our current debt levels, the related risks that we and you now face could
THE AGREEMENTS AND INSTRUMENTS GOVERNING OUR DEBT CONTAIN RESTRICTIONS AND
LIMITATIONS WHICH COULD SIGNIFICANTLY IMPACT OUR ABILITY TO OPERATE OUR BUSINESS
AND REPAY THE NOTES.
Our credit facilities and the indentures governing the notes contain a
number of significant covenants that could adversely impact our business. These
covenants, among other things, restrict the ability of our subsidiaries to:
- pay dividends;
- pledge assets;