Cincinnati Bell 2014 Annual Report Download - page 12

Table of Contents
Form 10-K Part I
Cincinnati Bell Inc.
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In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating us. Our business,
financial condition, liquidity or results of operations could be materially affected by any of these risks.
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The Company’s substantial debt could limit its ability to fund operations, raise additional capital, and fulfill its obligations, which, in turn, would have a
material adverse effect on its businesses and prospects generally.
The Company has a substantial amount of debt and has significant debt service obligations. As of December 31, 2014, the Company and its subsidiaries had
outstanding indebtedness of $1,784.2 million, on which it incurred $148.7 million of interest expense in 2014, and had total shareowners’ deficit of $648.5
million. At December 31, 2014, the Company and its subsidiaries had $90.7 million of borrowing availability under its accounts receivable securitization
facility ("Receivables Facility"), and had the ability to borrow up to an additional $150.0 million under the Corporate Credit Agreement's revolving credit
facility, subject to compliance with certain conditions. In addition, the Company's ability to incur additional debt from time to time is subject to the
restrictions contained in its credit facilities and other debt instruments.
The Company’s substantial debt has important consequences, including the following:
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the Company is required to use a substantial portion of its cash flow from operations to pay principal and interest on its debt, thereby
reducing the availability of cash flow to fund working capital, capital expenditures, strategic acquisitions, investments and alliances,
and other general corporate requirements;
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there is a variable interest rate on a portion of its debt which could increase if the market rates increase;
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the Company’s substantial debt increases its vulnerability to adverse changes in the credit markets, which adverse changes could
increase the Company's borrowing costs and limit the availability of financing;
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the Company’s debt service obligations limit its flexibility to plan for, or react to, changes in its business and the industries in which
it operates;
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the Company’s level of debt and shareowners’ deficit may restrict it from raising additional financing on satisfactory terms to fund
working capital, capital expenditures, strategic acquisitions, investments and alliances, and other general corporate requirements; and
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the Company’s debt instruments require the Company to comply with specified financial ratios and other restrictive covenants.
Failure to comply with these covenants, if not cured or waived, could limit availability to the cash required to fund the Company's
operations and general obligations and could result in the Company’s dissolution, bankruptcy, liquidation, or reorganization.
The Company’s creditors and preferred stockholders have claims that are superior to claims of the holders of the Company's common stock. Accordingly, in
the event of the Company’s dissolution, bankruptcy, liquidation, or reorganization, payment is first made on the claims of creditors of the Company and its
subsidiaries, then preferred stockholders, and finally, if amounts are available, to holders of the Company's common stock.
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