Virgin Media 2008 Annual Report Download - page 124

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8—Long Term Debt (Continued)
requirement. The margins on £1,820 million of the term loan facilities and on the revolving credit
facility ratchet range from 1.25% to 2.25% based on leverage ratios. Interest is payable at least
semi-annually. Principal repayments in respect of £1,820 million of the term loan facilities are due
semi-annually beginning in March 2010 and ending on March 3, 2011, and the remaining term loan
facilities are repayable in full on their maturity dates, which are September 3, 2012 and March 3, 2013.
We are also required to make principal repayments out of excess cash flows if certain criteria are met.
On November 10, 2008, we amended our senior credit facility in order, subject to the repayment
condition described below, to defer over 70.3% of the remaining principal payments due in 2010 and
2011 to June 2012, extend the maturity of over 72.3% of the existing revolving facility from March 2011
to June 2012 and reset certain financial covenant ratios. These changes will only become effective after
we have made certain principal repayments under the senior credit facility totaling £487.0 million, of
which £300.0 million was paid in December 2008. We have until August 10, 2009, subject to exercising a
three-month extension option, to satisfy the £187.0 million remaining under the repayment condition.
As part of the amendments, certain lenders have received a margin increase of 1.50% and, subject
to the repayment condition, certain other lenders will receive a margin increase of 1.375%. We have
paid fees of £49.2 million in 2008 in connection with the amendments and will pay up to an additional
£13.0 million in fees upon satisfaction of the repayment condition. The amendments also, among other
things, suspended the right of certain lenders to receive a pro rata share of prepayments.
The facility is secured through a guarantee from Virgin Media Finance PLC. In addition, the bulk
of the facility is secured through guarantees and first priority pledges of the shares and assets of
substantially all of the operating subsidiaries of Virgin Media Investment Holdings Limited, or VMIH,
and of receivables arising under any intercompany loans to those subsidiaries. We are subject to
financial maintenance tests under the facility, including a test of liquidity, coverage and leverage ratios
applied to us and certain of our subsidiaries. As of December 31, 2008, we were in compliance with
these covenants.
The agreements governing the senior notes and the senior credit facility significantly restrict the
ability of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances. In
addition, the agreements significantly, and, in some cases, absolutely restrict our ability and the ability
of most of our subsidiaries to:
• incur or guarantee additional indebtedness;
• pay dividends or make other distributions, or redeem or repurchase equity interests or
subordinated obligations;
• make investments;
• sell assets, including the capital stock of subsidiaries;
• enter into sale and leaseback transactions or certain vendor financing arrangements;
• create liens;
• enter into agreements that restrict the restricted subsidiaries’ ability to pay dividends, transfer
assets or make intercompany loans;
• merge or consolidate or transfer all or substantially all of our assets; and
• enter into transactions with affiliates.
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