Virgin Media 2011 Annual Report Download - page 31

Any of these or other consequences or events could have a material adverse effect on our ability to satisfy
our debt obligations, which could adversely affect our business and operations.
We may not be able to fund our debt service obligations in the future.
We have significant principal payments due from 2015 onwards that could require a partial or
comprehensive refinancing of our senior credit facility and 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 our ability to finance future operations
and how we manage our business.
The agreements that govern our indebtedness contain financial maintenance tests and restrictive covenants
that restrict our ability to incur additional debt and limit the discretion of our management over various business
matters. For example, the financial maintenance tests include leverage and interest coverage ratios, and the
restrictive covenants impact our ability to:
• 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.
Although these limitations are subject to significant exceptions and qualifications, if we breach any of these
covenants, or are unable to comply with the required financial ratios, we may be in default under our debt
instruments. A significant portion of our indebtedness may then become immediately due and payable, and we
may not have sufficient assets to repay amounts due thereunder.
30