Cincinnati Bell 2005 Annual Report Download - page 125

7% Senior Notes due 2015
On February 16, 2005, as part of its refinancing plan, the Company sold in a private offering $250 million of
new 7% Senior Notes due 2015 (the “7% Senior Notes”). Net proceeds from this issuance together with those of
other concurrently issued bonds and amounts under the Corporate credit facility were used to repay and terminate
all of the prior credit facility and pay consent fees associated with an amendment to the 7
1
⁄ 4 % Indenture. The 7%
Senior Notes are fixed rate bonds to maturity.
Interest on the 7% Senior Notes is payable semi-annually in cash in arrears on February 15 and August 15 of
each year, commencing August 15, 2005. The 7% Senior Notes are unsecured senior obligations and rank equally
with all of the Company’s existing and future senior debt and rank senior to all existing and future subordinated
debt. Each of the Company’s current subsidiaries that is a guarantor of the Corporate credit facility is also a
guarantor of the 7% Senior Notes on an unsecured senior basis, with certain immaterial exceptions. The
indenture governing the 7% Senior Notes contains covenants including but not limited to the following:
limitations on dividends to shareowners and other restricted payments; dividend and other payment restrictions
affecting the Company’s subsidiaries such that the subsidiaries are not permitted to enter into an agreement that
would limit their ability to make dividend payments to the parent; issuance of indebtedness; asset dispositions;
transactions with affiliates; liens; investments; issuances and sales of capital stock of subsidiaries; and
redemption of debt that is junior in right of payment. The indenture governing the 7% Senior Notes provides for
an event of default upon the default and acceleration of any other existing debt instrument which exceeds $20
million.
The Company may redeem the 7% Senior Notes for a redemption price of 103.500%, 102.333%, 101.167%,
and 100.000% after February 15, 2010, 2011, 2012 and 2013, respectively. At any time prior to February 15,
2010, the Company may redeem all or part of the 7% Senior Notes at a redemption price equal to the sum of 1)
100% of the principal, plus 2) the greater of (a) 1% of the face value of the 7% Senior Notes to be redeemed, or
(b) the excess over the principal amount of the sum of the present values of (i) 103.5% of the face value of the
7% Senior Notes, and (ii) interest payments due from the date of redemption through February 15, 2010, in each
case discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rates plus 0.50%,
plus 3) accrued and unpaid interest, if any, to the date of redemption. Prior to February 15, 2008, the Company
may redeem up to a maximum of 35% of the principal amount of the 7% Senior Notes with the net cash proceeds
of one or more equity offerings by the Company at a redemption price equal to 107%, plus accrued and unpaid
interest, if any, to the redemption date. The Company incurred $15.3 million of interest expense related to these
notes in 2005.
7
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⁄ 4 % Senior Notes due 2023
In July 1993, the Company issued $50 million of 7
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⁄ 4 % Senior Notes due 2023. The indenture related to
these 7
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⁄ 4 % Senior Notes due 2023 does not subject the Company to restrictive financial covenants, but it does
contain a covenant providing that if the Company incurs certain liens on its property or assets, the Company must
secure the outstanding 7
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⁄ 4 % Senior Notes due 2023 equally and ratably with the indebtedness or obligations
secured by such liens. The 7
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⁄ 4 % Senior Notes due 2023 are collateralized with assets of the Company (but not
its subsidiaries) by virtue of the lien granted under the Corporate credit facility. Interest on the 7
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⁄ 4 % Senior
Notes due 2023 is payable semi-annually on June 15 and December 15. The Company may not redeem the 7
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⁄ 4 %
Senior Notes due 2023 prior to maturity. The indenture governing 7
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⁄ 4 % Senior Notes due 2023 provides for an
event of default upon the default and acceleration of any other existing debt instrument which exceeds $20
million. The Company recorded $3.6 million of interest expense related to these notes in each of 2005, 2004, and
2003.
Cincinnati Bell Telephone Notes
CBT has $80 million in notes outstanding that are guaranteed by Cincinnati Bell Inc. but not the other
subsidiaries of Cincinnati Bell Inc. These notes have original maturities of up to 30 years and mature in 2023.
Interest rates on this indebtedness range from 7.18% to 7.27%. These notes may be redeemed at any time, subject
to proper notice.
In November 1998, CBT issued $150 million in aggregate principal amount of 6.30% unsecured senior
notes due 2028, which is guaranteed on a subordinated basis by Cincinnati Bell Inc. but not the other subsidiaries
of Cincinnati Bell Inc. These notes may be redeemed at any time, subject to proper notice.
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