Cincinnati Bell 2006 Annual Report Download - page 185

defined in the 7
1
⁄ 4 % Indenture. In addition, the 7
1
⁄ 4 % Indenture was also amended to, among other things, permit
the classification of any potential call by the Company of Cingular’s minority interest ownership as a “permitted
acquisition” and would therefore not be considered a restricted payment with regard to the 7
1
⁄ 4 % Indenture.
In the third quarter of 2006, the Company purchased and extinguished $3.1 million of 7
1
⁄ 4 % Notes due 2013
and recognized a loss on extinguishment of debt of $0.1 million. As of December 31, 2006 the Company has
$496.9 million outstanding under the 7
1
⁄ 4 % Notes due 2013.
8
3
⁄ 8 % Senior Subordinated Notes due 2014
On November 19, 2003, the Company issued $540 million of 8
3
⁄ 8 % Notes. The net proceeds, after
deducting the initial purchasers’ discounts and fees and expenses related to the 8
3
⁄ 8 % Notes, totaled $528.2
million. The Company used $524.6 million of the net proceeds to purchase all of the Company’s then outstanding
Convertible Subordinated Notes due 2009, which bore interest at a rate of 9%, at a discounted price equal to 97%
of their accreted value. The remaining proceeds were used to pay fees related to a credit facility amendment and
to reduce outstanding borrowings under the revolving credit facility.
On February 16, 2005, as part of the first stage of its 2005 refinancing plan, the Company issued an
additional $100 million of debt securities pursuant to the existing indenture. Net proceeds from this issuance
together with those of other concurrently issued bonds and amounts under the Corporate credit facility were used
to repay and terminate all of the prior credit facility and pay consent fees associated with an amendment to the
7
1
⁄ 4 % Indenture. All of the 8
3
⁄ 8 % Notes constitute a single class of security with the same terms and are fixed
rate bonds to maturity.
Interest on the 8
3
⁄ 8 % Notes is payable in cash semi-annually in arrears on January 15 and July 15,
commencing on July 15, 2004. The 8
3
⁄ 8 % Notes are unsecured senior subordinated obligations, ranking junior to
all existing and future senior indebtedness of the Company. The 8
3
⁄ 8 % Notes rank equally with all of the
Company’s existing and future senior subordinated debt and rank senior to all future subordinated debt. The
8
3
⁄ 8 % Notes are guaranteed on an unsecured senior subordinated basis by each of the Company’s current
subsidiaries that is a guarantor under the Corporate credit facility, with certain immaterial exceptions. The
indenture governing the 8
3
⁄ 8 % Notes contains covenants including but not limited to the following: limitations on
dividends to shareowners and other restricted payments; dividend and other payment restrictions affecting the
Company’s subsidiaries such that the subsidiaries are not permitted to enter into an agreement that would limit
their ability to make dividend payments to the parent; issuance of indebtedness; asset dispositions; transactions
with affiliates; liens; investments; issuances and sales of capital stock of subsidiaries; and redemption of debt that
is junior in right of payment. The indenture governing the 8
3
⁄ 8 % Notes provides for customary events of default,
including a cross-default provision for both nonpayment at final maturity or acceleration due to a default of any
other existing debt instrument that exceeds $20 million. The Company may redeem the 8
3
⁄ 8 % Notes for a
redemption price of 104.188%, 102.792%, 101.396%, and 100.000% after January 15, 2009, 2010, 2011, and
2012, respectively. The Company incurred $53.6 million, $52.5 million and $45.2 million of interest expense
related to these notes in 2006, 2005 and 2004, respectively.
7% Senior Notes due 2015
On February 16, 2005, as part of its refinancing plan, the Company sold in a private offering $250 million of
new 7% Senior Notes due 2015 (the “7% Senior Notes”). Net proceeds from this issuance together with those of
other concurrently issued bonds and amounts under the Corporate credit facility were used to repay and terminate
all of the prior credit facility and pay consent fees associated with an amendment to the 7
1
⁄ 4 % Indenture. The 7%
Senior Notes are fixed rate bonds to maturity.
Interest on the 7% Senior Notes is payable semi-annually in cash in arrears on February 15 and August 15 of
each year, commencing August 15, 2005. The 7% Senior Notes are unsecured senior obligations ranking equally
with all existing and future senior debt and ranking senior to all existing senior subordinated indebtedness,
including senior subordinated notes, and subordinated indebtedness. Each of the Company’s current and future
subsidiaries that is a guarantor under the Corporate credit facility is also a guarantor of the 7% Senior Notes on
an unsecured senior basis, with certain immaterial exceptions. The indenture governing the 7% Senior Notes
contains covenants including but not limited to the following: limitations on dividends to shareowners and other
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