Virgin Media 2009 Annual Report Download - page 37

• 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 and certain vendor financing arrangements;
• create liens;
• enter into agreements that restrict some of our 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.
These restrictions could materially adversely affect our ability to finance future operations or
capital needs or to engage in other business activities that may be in our best interests. We may also
incur other indebtedness in the future that may contain financial or other covenants more restrictive
than those applicable under our current indebtedness. We cannot assure you that we will be able to
remain in compliance with these covenants in the future, and, if we fail to do so, that we will be able to
obtain waivers from the appropriate parties and/or amend the covenants.
We are a holding company dependent upon cash flow from subsidiaries to meet our obligations.
Virgin Media Inc. and a number of its subsidiaries are holding companies with no independent
operations or significant assets other than investments in their subsidiaries. Each of these holding
companies depends upon the receipt of sufficient funds from its subsidiaries to meet its obligations.
The terms of our senior credit facility and other indebtedness limit the payment of dividends, loan
repayments and other distributions to or from these companies under many circumstances. Various
agreements governing our debt may restrict and, in some cases, may also prohibit the ability of these
subsidiaries to move cash within their restricted group. Applicable tax laws may also subject such
payments to further taxation.
Applicable law may also limit the amounts that some of our subsidiaries will be permitted to pay
as dividends or distributions on their equity interests, or even prevent such payments.
The inability to transfer cash among entities within their respective consolidated groups may mean
that even though the entities, in aggregate, may have sufficient resources to meet their obligations, they
may not be permitted to make the necessary transfers from one entity in their restricted group to
another entity in their restricted group in order to make payments to the entity owing the obligations.
Risks Relating to Our Common Stock
Conversion of our convertible notes will dilute the ownership interest of existing stockholders.
Any issuance by us of our common stock upon conversion of our convertible notes will dilute the
equity ownership interest of existing stockholders, including holders who have received shares of our
common stock upon prior conversion of our convertible notes. Additionally, our convertible notes
include anti-dilution and ‘‘make-whole’’ premium provisions that, if triggered, would result in an
increase in the number of shares of our common stock issuable upon conversion of the convertible
notes. Conversion of the convertible notes in circumstances where these provisions have operated could
have a significantly greater dilutive effect.
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