Time Warner Cable 2008 Annual Report Download - page 121

Supplemental Credit Agreement
On December 10, 2008, Time Warner (as lender) and TWC (as borrower) entered into the Supplemental Credit
Agreement, a two-year $1.535 billion senior unsecured supplemental term loan facility. The Company may borrow
under the Supplemental Credit Agreement only to repay amounts outstanding at the final maturity of the 2008
Bridge Facility, if any (the date of such borrowing, the “Supplemental Borrowing Date”).
Time Warner may assign its obligations under the Supplemental Credit Agreement to certain other lenders
with the Company’s consent, but any such assignment prior to the Supplemental Borrowing Date will not relieve
Time Warner of its obligation to fund the full amount of the Supplemental Credit Agreement on the Supplemental
Borrowing Date.
Amounts outstanding under the Supplemental Credit Agreement will bear interest at a rate equal to LIBOR or,
if Time Warner has assigned its loans under the Supplemental Credit Agreement in full, at a rate equal to LIBOR or
an alternate base rate, at the Company’s option, plus, in each case, an applicable margin based on TWC’s credit
rating. The applicable margin may be increased on the Supplemental Borrowing Date based on the average price for
a five-year credit default swap of TWC for the thirty days preceding the Supplemental Borrowing Date, but will not
exceed 500 basis points. In addition, the per annum interest rate under the Supplemental Credit Agreement will
increase by 25 basis points every six months following the Supplemental Borrowing Date until all amounts
outstanding under the Supplemental Credit Agreement are repaid.
The Supplemental Credit Agreement contains a maximum leverage ratio covenant of five times the consol-
idated EBITDA (as defined in the Supplemental Credit Agreement) of TWC. The Supplemental Credit Agreement
also contains conditions, covenants, representations and warranties and events of default (with customary grace
periods, as applicable) substantially identical to the conditions, covenants, representations and warranties and
events of default in the 2008 Bridge Facility. If any events of default occur and are not cured within applicable grace
periods or waived, the maturity of the outstanding loans may be accelerated. TWC is not subject to the leverage ratio
covenant or other covenants or events of default unless and until the Supplemental Borrowing Date, at which point,
the leverage ratio covenant and other covenants and events of default become effective. As a condition to borrowing
under the Supplemental Credit Agreement, at the Supplemental Borrowing Date, no defaults or events of default
under the Supplemental Credit Agreement and no events of default under the Revolving Credit Facility may be in
existence.
Time Warner’s commitment under the Supplemental Credit Agreement will be further reduced by (i) 50% of
any additional amounts by which the commitments under the 2008 Bridge Facility are further reduced by the net
cash proceeds of subsequent issuances of debt or certain equity or certain asset sales by TWC prior to TWC’s
borrowing under the 2008 Bridge Facility and (ii) the amount by which the sum of the borrowing availability under
the Revolving Credit Facility plus the amount above $100 million of the total cash and equivalents of TWC and
certain of its subsidiaries exceeds $2.0 billion (x) on any date prior to the Supplemental Borrowing Date on which
the commitments under the Revolving Credit Facility are increased in excess of the current $6.0 billion amount or
(y) on the Supplemental Borrowing Date. After the Supplemental Borrowing Date, subject to certain limited
exceptions, TWC will be required to use the net cash proceeds from any incurrence of debt (other than an incurrence
of debt under the Revolving Credit Facility and its existing commercial paper program), issuance of equity
securities and asset sale to prepay amounts outstanding under the Supplemental Credit Agreement. In addition,
TWC must prepay amounts outstanding under the Supplemental Credit Agreement by the amount by which the sum
of the borrowing availability under the Revolving Credit Facility plus the amount above $100 million of the total
cash and equivalents of TWC and certain of its subsidiaries exceeds $2.0 billion (i) on any date on which the
commitments under the Revolving Credit Facility are increased in excess of the current $6.0 billion amount and
(ii) on the last day of each fiscal quarter. TWC may prepay amounts outstanding under the Supplemental Credit
Agreement at any time without penalty or premium, subject to minimum amounts.
Time Warner’s commitment to fund a borrowing under the Supplemental Credit Agreement is subject to
satisfaction of certain customary conditions. Time Warner’s commitment will expire on the earliest of (i) the final
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)