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SEC Filings

S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 11/01/1999
Entire Document
 
<PAGE>   572
                       AVALON CABLE LLC AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
services were terminated. The Agreement also permitted Avalon Cable of Michigan,
Inc. to agree to acquire the remaining shares of Mercom that it did not own.
 
     Michigan Holdings contributed $137,375 in cash to Avalon Cable of Michigan,
Inc., which was used to consummate the Merger. On November 5, 1998, Michigan
Holdings received $105,000 in cash in exchange for promissory notes to lenders
(the "Bridge Agreement"). On November 6, 1998, Michigan Holdings contributed the
proceeds received from the Bridge Agreement and an additional $35,000 in cash to
Avalon Cable of Michigan Inc. in exchange for 100 shares of common stock.
 
     On March 26, 1999, Avalon completed a series of transactions to facilitate
certain aspects of its financing between affiliated entities under common
control. As a result of these transactions:
 
     - Avalon Cable of Michigan, Inc. contributed its assets and liabilities
       excluding deferred tax liabilities, net to Avalon in exchange for an
       approximate 88% voting interest in Avalon, which then transferred those
       assets and liabilities to its wholly-owned subsidiary Avalon Michigan;
 
     - Avalon Michigan now operates the Michigan cluster replacing Avalon Cable
       of Michigan, Inc.;
 
     - Avalon Cable of Michigan Holdings, Inc. ceased to be an obligor on the
       exchanged notes and together with Avalon Cable of Michigan, Inc. became a
       guarantor of the obligations of the Company under the exchanged notes;
 
     - Avalon Michigan became an additional obligor on the Senior Subordinated
       Notes replacing Avalon Cable of Michigan, Inc.; and
 
     - Avalon Cable of Michigan, Inc. ceased to be an obligor on the Senior
       Subordinated Notes and the credit facility and became a guarantor of the
       obligations of Avalon Michigan under the Senior Subordinated Notes and
       the credit facility.
 
     As a result of the reorganization between entities under common control,
the Company accounted for the reorganization similar to a pooling-of-interests.
Under the pooling-of-interests method, the results of operations for Avalon
include the results of operations from the date of inception (June 2, 1998) of
Avalon Cable of Michigan, Inc. and the date of acquisition of the completed
acquisitions.
 
     Avalon New England and Avalon Michigan provide cable service to the western
New England area and the state of Michigan, respectively. Avalon New England and
Avalon Michigan's cable systems offer customer packages of basic and premium
cable programming services which are offered at a per channel charge or are
packaged together to form a tier of services offered at a discount from the
combined channel rate. Avalon New England and Avalon Michigan cable systems also
provide premium cable services to their customers for an extra monthly charge.
Customers generally pay initial connection charges and fixed monthly fees for
cable programming and premium cable services, which constitute the principal
sources of revenue for Avalon New England and Avalon Michigan.
 
     Avalon Holdings Finance was formed for the sole purpose of facilitating
financings associated with the acquisitions of various cable operating
companies. Avalon Holdings Finance conducts no other activities.
 
                                      F-325