As of June 30, 1999, there was $375.0 million total principal amount
outstanding on the Falcon senior debentures, and the accreted value of the
senior discount debentures was $308.7 million.
THE FALCON SUBORDINATED NOTES. On October 21, 1991, Falcon Telecable,
L.P., a subsidiary of Falcon Holding Group, L.P. issued $15.0 million aggregate
principal amount of 11.56% subordinated notes due 2001. Interest is payable
semi-annually on March 31 and September 30 of each year.
The Falcon subordinated notes are redeemable at the issuer's option, in
whole or in part, at any time in whole or part on or after June 30, 1993, at
100% of their principal amount, plus accrued interest to the date of redemption
and a make-whole premium.
Among other restrictions, the note purchase agreement governing the Falcon
subordinated notes limits the activities of the issuer and its subsidiaries to:
- incur additional debt;
- pay dividends or make other restricted payments;
- enter into transactions with affiliates;
- create liens;
- incur additional debt; and
- sell assets or subsidiary stock.
In addition, the terms of the note purchase agreement prohibits the issuer from
being acquired by an unaffiliated entity. The events of default for the Falcon
subordinated notes include a cross-default provision that is triggered by the
failure to pay the principal of debt of Falcon Telecable or specified
subsidiaries in a total principal amount in excess of $1 million, or any event
which results in acceleration of the maturity of this debt.
Our acquisition of Falcon will constitute an event of default under the
note purchase agreement and will give rise, if written notice is given by
holders of a majority in outstanding amount of notes, to an obligation to repay
all outstanding principal and accrued interest on the Falcon subordinated notes,
plus a specified premium, within 30 days of the receipt of the notice. Absent
receipt of a waiver by the noteholders of the change of control default, which
we do not expect to receive, we expect to repay at the time of the closing of
the Falcon acquisition, the $15 million principal amount of the notes, plus
accrued interest and a specified premium, with available sources of funds.
As of June 30, 1999, $15.0 million principal amount of the Falcon
subordinated notes was outstanding.
THE AVALON 11 7/8% NOTES. On December 3, 1998, Avalon Cable LLC and
Avalon Cable Holdings Finance, Inc. jointly issued $196 million total principal
amount at maturity of 11 7/8% senior discount notes due December 1, 2008. On
July 22, 1999, the issuers exchanged $196 million of the original issued and
outstanding 11 7/8% senior discount notes for an equivalent amount of new
11 7/8% senior discount notes due December 1, 2008. The form and terms of the
new Avalon 11 7/8% notes are substantially