Virgin Media 2009 Annual Report Download - page 36

Risks Relating to Our Financial Indebtedness and Structure
Our current leverage is substantial, which may have an adverse effect on our available cash flow, our ability
to obtain additional financing if necessary in the future, our flexibility in reacting to competitive and
technological changes and our operations.
We had consolidated total long term debt, including current portion, of £5,974.7 million as of
December 31, 2009. This high degree of leverage could have important consequences, including the
following:
• a substantial portion of our cash flow from operations will have to be dedicated to the payment
of interest and principal on existing indebtedness, thereby reducing the funds available for other
purposes;
• our ability to obtain additional financing in the future for working capital, capital expenditures,
product development, acquisitions or general corporate purposes may be impaired;
• our flexibility in reacting to competitive technological and other changes may be limited;
• our substantial degree of leverage could make us more vulnerable in the event of a downturn in
general economic conditions or adverse developments in our business; and
• we are exposed to risks inherent in interest rate and foreign exchange rate fluctuations.
We may not be able to fund our debt service obligations in the future.
We have significant principal payments due in 2012 under our senior credit facility that could
require a partial or comprehensive refinancing of our remaining senior credit facility, and the possible
use of other debt instruments. Our ability to implement such a refinancing successfully would be
significantly dependent on stable debt capital markets. In addition, we may not achieve or sustain
sufficient cash flow in the future for the payment of principal or interest on our indebtedness when
due. Consequently, we may be forced to raise cash or reduce expenses by doing one or more of the
following:
• raising additional debt;
• restructuring or refinancing our indebtedness prior to maturity, and/or on unfavorable terms;
• selling or disposing of some of our assets, possibly on unfavorable terms;
• issuing equity or equity-related instruments that will dilute the equity ownership interest of
existing stockholders; or
• foregoing business opportunities, including the introduction of new products and services,
acquisitions and joint ventures.
We cannot be sure that any of, or a combination of, the above actions would be sufficient to fund our
debt service obligations, particularly in times of turbulent capital markets.
The covenants under our debt agreements place certain limitations on how we manage our business.
The agreements that govern our indebtedness contain financial maintenance tests and restrictive
covenants that limit the discretion of our management over various business matters. For example, the
financial maintenance tests include liquidity, coverage and leverage ratios, and the restrictive covenants
impact our ability to:
• incur or guarantee additional indebtedness;
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