Cincinnati Bell 2007 Annual Report Download - page 151

Senior Notes, 7
1
⁄ 4 % Notes due 2013, and 8
3
⁄ 8 % Notes, with certain immaterial exceptions. Refer to Note 18 for
supplemental guarantor information. The Company’s obligations under the Corporate credit facility are also
collateralized by perfected first priority pledges and security interests in the following:
•substantially all of the equity interests of the Company’s subsidiaries (other than subsidiaries of CBT,
CBF and certain immaterial subsidiaries); and
•certain personal property and intellectual property of the Company and its subsidiaries (other than that of
CBT, CBET, CBF and certain immaterial subsidiaries).
The guarantee and security reflect the addition of CBW as a guarantor and certain of its assets as collateral
due to its status as a wholly-owned subsidiary effective February 14, 2006 due to the Company’s purchase of the
remaining minority ownership interest in CBW on that date.
The Corporate credit facility financial covenants require that the Company maintain certain leverage,
interest coverage and fixed charge ratios. The facilities also contain certain covenants which, among other things,
restrict the Company’s ability to incur additional debt or liens, pay dividends, repurchase Company common
stock, sell, transfer, lease, or dispose of assets and make investments or merge with another company. If the
Company were to violate any of its covenants and was unable to obtain a waiver, it would be considered a
default. If the Company were in default under the Corporate credit facility, no additional borrowings under this
facility would be available until the default was waived or cured. The credit facilities provide for customary
events of default, including a cross-default provision for failure to make any payment when due or permitted
acceleration due to a default, both in respect to any other existing debt instrument having an aggregate principal
amount that exceeds $35 million. The Company is in compliance with its Corporate credit facility covenants.
The Company has a right to request, but no lender is committed to provide, an increase in the aggregate
amount of the Corporate credit facility, up to $500.0 million in incremental borrowings, which may be structured
at the Company’s option as term debt or revolving debt.
Various issuances of the Company’s public debt, which include the 7
1
⁄ 4 % Senior Notes due 2013, the 8
3
⁄ 8 %
Senior Subordinated Notes due 2014, and the 7% Senior Notes due 2015, contain covenants that, among other
things, limit the Company’s ability to incur additional debt or liens, pay dividends or make other restricted
payments, sell, transfer, lease, or dispose of assets and make investments or merge with another company.
Restricted payments include common stock dividends, repurchase of common stock, and certain public debt
repayments. The Company believes it has sufficient ability under its public debt indentures to make its intended
restricted payments in 2008. The Company is in compliance with its public debt indentures as of the date of this
filing.
7
1
⁄ 4 % Senior Notes due 2013
In July 2003, the Company issued $500 million of 7
1
⁄ 4 % Senior Notes due 2013 (“7
1
⁄ 4 % Notes due 2013”).
Net proceeds, after deducting fees and expenses, totaled $488.8 million and were used to prepay term credit
facilities and permanently reduce commitments under the Company’s then-existing revolving credit facility.
Interest on the 7
1
⁄ 4 % Notes due 2013 is payable in cash semi-annually in arrears on January 15 and July 15 of
each year, commencing on January 15, 2004. The 7
1
⁄ 4 % Notes due 2013 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 and future subsidiaries that is a guarantor under the Corporate
credit facility is also a guarantor of the 7
1
⁄ 4 % Notes due 2013 on an unsecured basis with certain immaterial
exceptions. The indenture governing the 7
1
⁄ 4 % Notes due 2013 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 7
1
⁄ 4 %
Notes due 2013 provides for customary events of default, including a cross-default provision for failure for both
non-payment at final maturity or acceleration due to a default of any other existing debt instrument that exceeds
$20 million. The Company may redeem the 7
1
⁄ 4 % Notes due 2013 for a redemption price of 103.625%,
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Form 10-K