Cincinnati Bell 2010 Annual Report Download - page 170

with all existing and future senior debt and ranking senior to all existing and future senior subordinated
indebtedness and subordinated indebtedness. Each of the Company’s current and future subsidiaries that is a
guarantor under the Corporate credit facility is also a guarantor of the 81/4% Senior Notes on an unsecured senior
basis, with certain immaterial exceptions. The indenture governing the 81/4% 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 81/4% Senior Notes provides for customary events of default, including for nonpayment at final maturity and
for a default of any other existing debt instrument that exceeds $35 million.
The Company may redeem the 81/4% Senior Notes for a redemption price of 104.125%, 102.063%, and
100.000% on or after October 15, 2013, 2014, and 2015, respectively. At any time prior to October 15, 2013, the
Company may redeem all or part of the 81/4% 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 81/4% Senior Notes or (b) the excess over the
principal amount of the sum of the present values of (i) 104.125% of the face value of the 81/4% Senior Notes,
and (ii) interest payments due from the date of redemption to October 15, 2013, in each case discounted to the
redemption date on a semi-annual basis at the applicable U.S. Treasury rates plus one-half percent, plus
(3) accrued and unpaid interest, if any, to the date of redemption. Prior to October 15, 2012, the Company may
redeem up to a maximum of 35% of the aggregate principal amount of the 81/4% Senior Notes with the net cash
proceeds of one or more equity offerings by the Company, at a redemption price equal to 108.250% of the
principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date. The Company
incurred interest expense related to these notes of $41.3 million and $9.7 million in 2010 and 2009, respectively.
83/4% Senior Subordinated Notes due 2018
In March 2010, the Company issued $625 million of 83/4% Senior Subordinated Notes due 2018 (“83/4%
Subordinated Notes”), which are fixed rate bonds to maturity. The net proceeds of $616.2 million, after debt
discount, were used to call and redeem $560.0 million of 83/8% Subordinated Notes plus accrued and unpaid
interest and related call premium.
Interest on the 83/4% Subordinated Notes is payable semi-annually in cash in arrears on March 15 and
September 15 of each year, commencing September 15, 2010. The 83/4% Subordinated Notes are unsecured
senior subordinated obligations ranking junior to all existing and future senior debt, ranking equally to all
existing and future senior subordinated indebtedness, and ranking senior to all existing and future subordinated
indebtedness. Each of the Company’s current and future subsidiaries that is a guarantor under the Corporate
credit facility is also a guarantor of the 83/4% Subordinated Notes on an unsecured senior subordinated basis,
with certain immaterial exceptions. The indenture governing the 83/4% Subordinated 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
generally 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 83/4% Subordinated Notes provides for customary events of default, including for nonpayment at
final maturity and for a default of any other existing debt instrument that exceeds $35 million.
The Company may redeem the 83/4% Subordinated Notes for a redemption price of 104.375%, 102.188%,
and 100.000% on or after March 15, 2014, 2015, and 2016, respectively. At any time prior to March 15, 2014,
the Company may redeem all or part of the 83/4% Subordinated 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 83/4% Subordinated Notes or
(b) the excess over the principal amount of the sum of the present values of (i) 104.375% of the face value of the
83/4% Subordinated Notes, and (ii) interest payments due from the date of redemption to March 15, 2014, in each
case discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rates plus one-half
percent, plus (3) accrued and unpaid interest, if any, to the date of redemption. Prior to March 15, 2013, the
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