- Class A common stockholders would lose any right they had at that time or
might have had in the future to direct, through equity ownership in
Charter Communications, Inc., the management and affairs of Charter
Communications Holding Company; and
- Charter Communications, Inc. would become strictly a passive investment
This result, as well as the impact of being treated by investors as an
investment company, could materially adversely impact:
- the liquidity of the Class A common stock;
- how it trades in the marketplace;
- the price that purchasers would be willing to pay for the Class A common
stock in a change of control transaction or otherwise; and
- the market price of the Class A common stock which could experience a
significant decline as a result.
Uncertainties that may arise with respect to the nature of Charter
Communications, Inc.'s management role and voting power and organizational
documents, including legal actions or proceedings relating thereto, may also
materially adversely impact the value of the Class A common stock.
WE ARE DEPENDENT ON CHARTER INVESTMENT, INC. FOR NECESSARY PERSONNEL AND
Charter Communications, Inc. will initially have only twelve executive
officers, all of whom are also employees of Charter Investment, Inc. It will
receive from Charter Investment, Inc. other personnel and services necessary to
perform its obligations as Charter Communications Holding Company's sole
manager, pursuant to a mutual services agreement. As Charter Communications,
Inc. is restricted from holding any significant assets other than Charter
Communications Holding Company membership units, Charter Communications, Inc.
will be substantially dependent upon Charter Investment, Inc. for personnel and
support services. The termination or breach by Charter Investment, Inc. of the
mutual services agreement could adversely affect our ability to manage Charter
Communications Holding Company and, in turn, our cable systems.
THE SPECIAL TAX ALLOCATION PROVISIONS OF THE CHARTER COMMUNICATIONS HOLDING
COMPANY LIMITED LIABILITY COMPANY AGREEMENT MAY CAUSE CHARTER COMMUNICATIONS,
INC. IN SOME CIRCUMSTANCES TO PAY MORE TAXES THAN IF THE SPECIAL TAX ALLOCATION
PROVISIONS WERE NOT IN EFFECT.
Charter Communications Holding Company's limited liability company
agreement provides that through the end of 2003, tax losses of Charter
Communications Holding Company that would otherwise have been allocated to
Charter Communications, Inc. based generally on its percentage of outstanding
membership units of Charter Communications Holding Company will instead be
allocated to the membership units held by Vulcan Cable III Inc. and Charter
Investment, Inc. The purpose of these special