LIQUIDITY AND CAPITAL RESOURCES
The cable television business requires substantial capital for the
upgrading, expansion and maintenance of signal distribution equipment, as well
for home subscriber devices and wiring, and service vehicles. The Company will
continue to deploy fiber optic technology and to upgrade the Systems to a
minimum of 550 MHz. The deployment of fiber optic technology will allow the
Company to complete future upgrades to the Systems in a cost-effective manner.
The working capital requirements of a cable television business are
generally not significant since subscribers are billed for services monthly in
advance, while the majority of expenses incurred (except for payroll) are paid
generally 30-60 days after their incurrence.
Net cash used in operations was $5.6 million and $0.2 million for the
three months ended and six months ended June 30, 1999, respectively. Net cash
used in investing activities was $2.5 million and $7.5 million for the three
months ended and six months ended June 30, 1999. No cash was provided or used in
financing activities for the three months ended and six months ended June 30,
The Company expects to make substantial investments in capital to: (i)
upgrade its cable plant; (ii) build line extensions; (iii) purchase new
equipment; and (iv) acquire the equipment necessary to implement its digital,
Internet and data transmission strategies. In 1999, the Company estimates
capital expenditures will range from approximately $14 million to $17 million.
However, the actual amount and timing of the Company's capital requirements may
differ materially from the Company's estimates as a result of, among other
things, the demand for the Company's services and regulatory, technological and
competitive developments (including additional market developments and new
opportunities) in the Company's industry. During the six months ended June 30,
1999, the Company made capital expenditures of approximately $0.7 million.
Borrowings under Media's Credit Agreement bore interest at floating
rates, although the Company was required to maintain interest rate protection
programs. Media's obligations under the Credit Agreement were secured by
substantially all the assets of Media. On April 30, 1999, all outstanding
indebtedness under the Credit Agreement was repaid and the facility was
The Charter Transaction resulted in a "change of control" of the
Company. On May 28, 1999, in accordance with the terms and conditions of the
indenture governing the 10% senior discount notes (the "Notes"), the Company
made an offer (the "Purchase Offer") to purchase any and all of the Notes at
101% of their accreted value, plus accrued and unpaid interest, if any, through
June 28, 1999. The Purchase Offer expired on June 28, 1999, and 48,762 notes
($1,000 face amount at maturity) were validly tendered. On June 28, 1999, CC LLC
made a capital contribution in the amount of $34,223 enabling the Company to
purchase the Notes.
The indenture governing the 10% Notes limits cash payments by the
Company to the sum of: i) the amount by which consolidated EBITDA (as defined)
exceeds 130% of consolidated interest expense (as defined) determined on a
cumulative basis, ii) capital contributions, and iii) an amount equal to the net
reduction in investments (as defined). To the extent permitted by the indenture,
excess cash will be distributed to CC LLC, including repayments of borrowings
under Charter Communications Operating, LLC's ("CCO") the indirect parent of the
Company, credit facility (the "CCO Credit Agreement").
The Company and all subsidiaries of CCO have guaranteed payment and
performance by CCO of its obligations under the CCO Credit Agreement. In
addition, Group and its wholly owned subsidiaries, Renaissance (Louisiana) Media
LLC and Renaissance (Tennessee) Media LLC, and all subsidiaries of CCO have
pledged their ownership interests as collateral to the CCO Credit Agreement.