Cincinnati Bell 2012 Annual Report Download - page 89

Form 10-K Part I Cincinnati Bell Inc.
•enter into transactions with affiliates;
•sell assets;
•guarantee indebtedness;
•declare or pay dividends or other distributions to shareholders;
•repurchase equity interests;
•redeem debt that is junior in right of payment to such indebtedness;
•enter into agreements that restrict dividends or other payments from subsidiaries;
•issue or sell capital stock of certain of its subsidiaries; and
•consolidate, merge, or transfer all or substantially all of its assets and the assets of its subsidiaries on a
consolidated basis.
In addition, the Company’s credit facilities and debt instruments include restrictive covenants that may
materially limit the Company’s ability to prepay debt and preferred stock. The agreements governing the credit
facilities also require the Company to achieve and maintain compliance with specified financial ratios.
The restrictions contained in the terms of the credit facilities and its other debt instruments could:
•limit the Company’s ability to plan for or react to market conditions or meet capital needs or otherwise
restrict the Company’s activities or business plans; and
•adversely affect the Company’s ability to finance its operations, strategic acquisitions, investments or
alliances, or other capital needs, or to engage in other business activities that would be in its interest.
A breach of any of these restrictive covenants or the Company’s inability to comply with the required
financial ratios would result in a default under some or all of the debt agreements. During the occurrence and
continuance of a default, lenders may elect to declare all outstanding borrowings, together with accrued interest
and other fees, to be immediately due and payable.
Additionally, under the credit facilities, the lenders may elect not to provide loans until such default is cured
or waived. The Company’s debt instruments also contain cross-acceleration provisions, which generally cause
each instrument to be subject to early repayment of outstanding principal and related interest upon a qualifying
acceleration of any other debt instrument. Failure to comply with these covenants, if not cured or waived, could
limit the cash required to fund operations and its general obligations, and could result in the Company’s
dissolution, bankruptcy, liquidation, or reorganization.
The Company depends on its revolving credit and accounts receivable facilities to provide for its financing
requirements in excess of amounts generated by operations.
The Company depends on its revolving credit facility (“Corporate Credit Agreement”) and accounts
receivable securitization facility (“Receivables Facility”) to provide for temporary financing requirements in
excess of amounts generated by operations.
As of December 31, 2012, the Company had no outstanding borrowings or letters of credit under its
Corporate Credit Agreement or CyrusOne Credit Agreement, leaving $425.0 million in additional borrowing
availability under these facilities. With the completion of the CyrusOne IPO on January 24, 2013, the Company
no longer has access to the CyrusOne Credit Agreement, reducing its borrowing capacity by the $225 million
CyrusOne facility. The $200 million Corporate Credit Agreement is funded by various financial institutions. If
one or more of these banks is not able to fulfill its funding obligations, the Company’s financial condition could
be adversely affected.
The original revolving commitments under the Corporate Credit Agreement will be permanently reduced by
the lesser of (i) the amount of net cash proceeds from the first sale by the Company of its equity interests in
CyrusOne or CyrusOne LP to occur after the IPO of common stock of CyrusOne Inc. and (ii) $50.0 million,
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Form 10-K