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This excerpt taken from the CHTR DEF 14A filed Mar 17, 2008. CC
VIII, LLC
Charter acquired certain cable systems owned by Bresnan
Communications Company Limited Partnership in February 2000. As
part of a subsequent settlement in 2005 regarding an issue as to
whether the documentation for
Table of Contents
the Bresnan transaction was correct and complete with regard to
the ultimate ownership of the interest in CC VIII, LLC (the
“CC VIII Settlement”), an indirect limited liability
company subsidiary of Charter (“CC VIII”), CII
retained 30% of the CC VIII preferred membership interest (the
“Remaining Interests”). The Remaining Interests are
subject to certain drag along, tag along and transfer
restrictions as detailed in the revised CC VIII Limited
Liability Company Agreement. The CC VIII preferred interests are
entitled to a 2% accreting priority return on the priority
capital of CC VIII. The initial priority capital for the
Remaining Interests is $189 million. CCHC, LLC
(“CCHC”) (a direct subsidiary of Charter Holdco and
the direct parent of Charter Holdings) also issued to CII to a
subordinated exchangeable note with an initial accreted value of
$48 million, accreting at 14% per annum, compounded
quarterly, with a
15-year
maturity (the “CCHC note”). The accreted value of the
CCHC note as of December 31, 2007 was $65 million.
The CCHC note is exchangeable, at CII’s option, at any
time, for Charter Holdco Class A Common units at a rate
equal to the then accreted value, divided by $2.00 (the
“Exchange Rate”). Customary anti-dilution protections
have been provided that could cause future changes to the
Exchange Rate. Additionally, the Charter Holdco Class A
Common units received will be exchangeable by the holder into
Charter common stock in accordance with existing agreements
between CII, Charter and certain other parties signatory
thereto. Beginning February 28, 2009, if the closing price
of Charter common stock is at or above the Exchange Rate for a
certain period of time as specified in the Exchange Agreement,
Charter Holdco may require the exchange of the CCHC note for
Charter Holdco Class A Common units at the Exchange Rate.
CCHC has the right to redeem the CCHC note under certain
circumstances, for cash in an amount equal to the then accreted
value. Such amount, if redeemed prior to February 28, 2009,
would also include a make whole up to the accreted value through
February 28, 2009. CCHC must redeem the CCHC note at its
maturity for cash in an amount equal to the initial stated value
plus the accreted return through maturity.
Charter is currently in litigation with its former law firm to
recover damages arising from the Bresnan transaction and the CC
VIII Settlement. In addition, Charter and its subsidiaries have
agreed to reimburse CII and affiliates for all reasonable
expenses incurred as a result of its cooperation with Charter in
the pursuit, preservation or settlement of certain claims under
the CC VIII Settlement. To date, no request for reimbursement
has been made.
This excerpt taken from the CHTR DEF 14A filed Apr 30, 2007. CC
VIII, LLC
As part of the acquisition of the cable systems owned by Bresnan
Communications Company Limited Partnership in February 2000 and
a subsequent settlement in 2005 regarding an issue as to whether
the documentation for the Bresnan transaction was correct and
complete with regard to the ultimate ownership of the interest
in CC VIII, LLC, an indirect limited liability company
subsidiary of Charter (“CC VIII”).
CII retained 30% of the CC VIII preferred membership interest
(the “Remaining Interests”). The Remaining Interests
are subject to certain drag along, tag along and transfer
restrictions as detailed in the revised CC VIII Limited
Liability Company Agreement. The CC VIII preferred interests are
entitled to a 2% accreting priority return on the priority
capital of CC VIII. The initial priority capital for the
Remaining Interests is $189 million. CCHC, LLC
(“CCHC”) (a direct subsidiary of Charter Holdco and
the direct parent of Charter Holdings) also issued to CII to a
subordinated exchangeable note with an initial accreted value of
$48 million, accreting at 14% per annum, compounded
quarterly, with a
15-year
maturity (the “CCHC note”).
The CCHC note is exchangeable, at CII’s option, at any
time, for Charter Holdco Class A Common units at a rate
equal to the then accreted value, divided by $2.00 (the
“Exchange Rate”). Customary anti-dilution protections
have been provided that could cause future changes to the
Exchange Rate. Additionally, the Charter Holdco Class A
Common units received will be exchangeable by the holder into
Charter common stock in accordance with existing agreements
between CII, Charter and certain other parties signatory
thereto. Beginning February 28, 2009, if the closing price
of Charter common stock is at or above the Exchange Rate for a
certain period of time as specified in the Exchange Agreement,
Charter Holdco may require the exchange of the CCHC note for
Charter Holdco Class A Common units at the Exchange Rate.
CCHC has the right to redeem the CCHC note under certain
circumstances, for cash in an amount equal to the then accreted
value, such amount, if redeemed prior to February 28, 2009,
would also include a make whole up to the accreted value through
February 28, 2009. CCHC must redeem the CCHC note at its
maturity for cash in an amount equal to the initial stated value
plus the accreted return through maturity.
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