Exhibit 10.1

 
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
 

 
)
 
In re
)
Chapter 11
 
)
 
CHARTER COMMUNICATIONS, INC., et al.,1
)
Case No. 09-11435 (JMP)___________
 
)
 
                       Debtors.
)
Jointly Administered
 
)
 

DEBTORS’ DISCLOSURE STATEMENT PURSUANT
TO CHAPTER 11 OF THE BANKRUPTCY CODE
WITH RESPECT TO THE DEBTORS’ JOINT PLAN OF REORGANIZATION
 
THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN.  ACCEPTANCES
OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN
APPROVED BY THE BANKRUPTCY COURT.  THIS DISCLOSURE STATEMENT IS BEING SUBMITTED
FOR APPROVAL BUT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT.  THE INFORMATION
IN THIS DISCLOSURE STATEMENT IS SUBJECT TO CHANGE.  THIS DISCLOSURE STATEMENT IS
NOT AN OFFER TO SELL ANY SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY ANY
SECURITIES.

KIRKLAND & ELLIS
LLP                                                                KIRKLAND &
ELLIS LLP
Citigroup
Center                                                                       
200 East Randolph Drive
153 East 53rd
Street                                                                    Chicago,
Illinois 60601-6636
New York, New York
10022-4611                                                     Telephone: (312)
861-2000
Telephone: (212)
446-4800                                                                Facsimile:
(312) 851-2200
Facsimile: (212)
446-4900                                                                   Ray
C. Schrock
Richard M. Cieri
Paul M. Basta
Stephen E. Hessler
 
        Counsel to the Debtors and Debtors in Possession (other than
        Charter Investment, Inc.)
TOGUT, SEGAL & SEGAL LLP
One Penn Plaza
New York, New York 10119
Telephone: (212) 594-5000
Facsimile: (212) 967-4258
Albert Togut
Frank A. Oswald
        Counsel to the Debtor and Debtor in Possession Charter
        Investment, Inc.

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1  The Debtors in these cases include: Ausable Cable TV, Inc.; Hometown TV,
Inc.; Plattsburgh Cablevision, Inc.; Charter Communications Entertainment, LLC;
Falcon First Cable of New York, Inc.; Charter Communications, Inc.; Charter
Communications Holding Company, LLC; CCHC, LLC; Charter Communications Holdings,
LLC; CCH I Holdings, LLC; CCH I, LLC; CCH II, LLC; CCO Holdings, LLC; Charter
Communications Operating, LLC; American Cable Entertainment Company, LLC; Athens
Cablevision, Inc.; Cable Equities Colorado, LLC; Cable Equities of Colorado
Management Corp.; CC 10, LLC; CC Fiberlink, LLC; CC Michigan, LLC; CC Systems,
LLC; CC V Holdings, LLC; CC VI Fiberlink, LLC; CC VI Operating, LLC; CC VII
Fiberlink, LLC; CC VIII Fiberlink, LLC; CC VIII Holdings, LLC; CC VIII Leasing
of Wisconsin, LLC; CC VIII Operating, LLC; CC VIII, LLC; CCH I Capital Corp.;
CCH I Holdings Capital Corp.; CCH II Capital Corp.;  CCO Fiberlink, LLC; CCO
Holdings Capital Corp.; CCO NR Holdings, LLC; CCO Purchasing, LLC; Charter
Advertising of Saint Louis, LLC; Charter Cable Leasing of Wisconsin, LLC;
Charter Cable Operating Company, L.L.C.; Charter Cable Partners, L.L.C.; Charter
Communications Entertainment I, DST; Charter Communications Entertainment I,
LLC; Charter Communications Entertainment II, LLC; Charter Communications
Holdings Capital Corporation; Charter Communications Operating Capital Corp.;
Charter Communications Properties LLC; Charter Communications V, LLC; Charter
Communications Ventures, LLC; Charter Communications VI, LLC; Charter
Communications VII, LLC; Charter Communications, LLC; Charter Distribution, LLC;
Charter Fiberlink – Alabama, LLC; Charter Fiberlink AR-CCVII, LLC; Charter
Fiberlink AZ-CCVII, LLC; Charter Fiberlink CA-CCO, LLC; Charter Fiberlink
CA-CCVII, LLC; Charter Fiberlink CC VIII, LLC; Charter Fiberlink CCO, LLC;
Charter Fiberlink CT-CCO, LLC; Charter Fiberlink – Georgia, LLC; Charter
Fiberlink ID-CCVII, LLC; Charter Fiberlink – Illinois, LLC; Charter Fiberlink
IN-CCO, LLC; Charter Fiberlink KS-CCO, LLC; Charter Fiberlink LA-CCO, LLC;
Charter Fiberlink MA-CCO, LLC; Charter Fiberlink – Michigan, LLC; Charter
Fiberlink – Missouri, LLC; Charter Fiberlink MS-CCVI, LLC; Charter Fiberlink
NC-CCO, LLC; Charter Fiberlink NC-CCVII, LLC; Charter Fiberlink – Nebraska, LLC;
Charter Fiberlink NH-CCO, LLC; Charter Fiberlink NM-CCO, LLC; Charter Fiberlink
NV-CCVII, LLC; Charter Fiberlink NY-CCO, LLC; Charter Fiberlink NY-CCVII, LLC;
Charter Fiberlink OH-CCO, LLC; Charter Fiberlink OK-CCVII, LLC; Charter
Fiberlink OR-CCVII, LLC; Charter Fiberlink SC-CCO, LLC; Charter Fiberlink
SC-CCVII, LLC; Charter Fiberlink – Tennessee, LLC; Charter Fiberlink TX-CCO,
LLC; Charter Fiberlink UT-CCVII, LLC; Charter Fiberlink VA-CCO, LLC; Charter
Fiberlink VT-CCO, LLC; Charter Fiberlink WA-CCVII, LLC; Charter Fiberlink –
Wisconsin, LLC; Charter Fiberlink WV-CCO, LLC; Charter Fiberlink, LLC; Charter
Gateway, LLC; Charter Helicon, LLC; Charter Investment, Inc.; Charter RMG, LLC;
Charter Stores FCN, LLC; Charter Video Electronics, Inc.; Dalton Cablevision,
Inc.; Enstar Communications Corporation; Falcon Cable Communications, LLC;
Falcon Cable Media, a California Limited Partnership; Falcon Cable Systems
Company II, L.P.; Falcon Cablevision, a California Limited Partnership; Falcon
Community Cable, L.P.; Falcon Community Ventures I, LP; Falcon First Cable of
the Southeast, Inc.; Falcon First, Inc.; Falcon Telecable, a California Limited
Partnership; Falcon Video Communications, L.P.; Helicon Partners I, L.P.; HPI
Acquisition Co., L.L.C.; Interlink Communications Partners, LLC; Long Beach,
LLC; Marcus Cable Associates, L.L.C.; Marcus Cable of Alabama, L.L.C.; Marcus
Cable, Inc.; Midwest Cable Communications, Inc.; Pacific Microwave; Peachtree
Cable TV, L.P.; Peachtree Cable T.V., LLC; Renaissance Media LLC; Rifkin
Acquisition Partners, LLC; Robin Media Group, Inc.; Scottsboro TV Cable, Inc.;
Tennessee, LLC; The Helicon Group, L.P.; Tioga Cable Company, Inc.; and Vista
Broadband Communications, LLC.
 

 
 
 

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TABLE OF CONTENTS
 
 
                                                                               Page
 
 
Important Information About This Disclosure Statement
 1

 
Questions and Answers Regarding this Disclosure Statement and the Plan
 4

 
Our History and Our Chapter 11 Cases
 14

 
Important Aspects of the Plan
 24

 
Treatment of Claims Against and Interests in the Debtors
 32

 
Management of the Company After the Effective Date
 56

 
Composition of New Board of Directors After the Effective Date
 57

 
The Reorganized Debtors Upon Emergence
 58

 
The Reorganized Company’s Capitalization Upon Consummation of the Plan
 59

 
Description of the New CCH II Notes
 62

 
Description of Capital Stock
 64

 
Reorganized Company’s Ownership Upon Emergence
 67

 
Summary of Legal Proceedings
 68

 
Projected Financial Information
 75

 
Risk Factors
 76

 
Confirmation Of The Plan
 90

 
Effect Of Confirmation Of The Plan
 94

 
Important Securities Law Disclosure
 98

 
Voting Instructions
 99

 
Certain U.S. Federal Income Tax Consequences Of The Plan
 102

 
Recommendation
 110

 
 
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EXHIBITS
EXHIBIT A                      Joint Plan of Reorganization
 
EXHIBIT B                      Disclosure Statement Order
 
EXHIBIT C                      Reorganized Debtors’ Financial Projections
 
EXHIBIT D                      Reorganized Debtors’ Valuation Analysis
 
EXHIBIT E                      Liquidation Analysis
 
EXHIBIT F                      Reconciliation of Non-GAAP Measures
 
 
 
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Important Information About This Disclosure Statement
 
This Disclosure Statement provides information regarding the Plan of
Reorganization that the Debtors are seeking to have confirmed by the Bankruptcy
Court.  The Debtors believe that the Plan is in the best interests of all
creditors.  The Debtors urge all holders of Claims and Interests entitled to
vote on the Plan to vote in favor of the Plan.
 
References to “New Class A Stock” in this Disclosure Statement are to the new
Class A common stock, par value $0.001 per share, references to “New Class B
Stock” in this Disclosure Statement are to the new Class B common stock, par
value $0.001 per share, and references to “New Preferred Stock” in this
Disclosure Statement are to the Series A 15% Pay-In-Kind Preferred Stock, par
value $.001 per share, in each case that reorganized Charter Communications,
Inc. (the “Reorganized Company”) will issue upon emergence as described in this
Disclosure Statement and in accordance with the Plan.  References to “New Common
Stock” in this Disclosure Statement are to the New Class A Stock and New Class B
Stock, collectively.
 
References to the New CCH II Notes are to the 13.5% Senior Notes due 2016 that
CCH II, LLC and CCH II Capital Corp. will issue upon emergence as described in
this Disclosure Statement and in accordance with the Plan.
 
References to the “Plan” are to the Joint Plan of Reorganization attached as
Exhibit A hereto.  All capitalized terms used but not otherwise defined herein
will have the meaning ascribed to them in the Plan.
 
References to the “Bankruptcy Court” are to the United States Bankruptcy Court
for the Southern District of New York, the court in which Charter
Communications, Inc. (“CCI”) and its direct and indirect subsidiaries and
certain of its affiliates (collectively, the “Debtors”) filed voluntary
petitions seeking reorganization relief under the provisions of Chapter 11 of
the Bankruptcy Code.  References to the “Petition Date” are to March 27, 2009.
 
Unless the context requires otherwise, reference to “we,” “our,” and “us” are to
the Debtors.
 
The confirmation of the Plan and effectiveness of the Plan are subject to
certain material conditions precedent described herein.  There is no assurance
that the Plan will be confirmed, or if confirmed, that the conditions required
to be satisfied will be satisfied or waived.
 
You are encouraged to read this Disclosure Statement in its entirety, including
without limitation, the Plan, which is annexed as Exhibit A hereto, and the
section entitled “Risk Factors,” prior to submitting your ballot to vote on the
Plan.
 
The Bankruptcy Court’s approval of this Disclosure Statement does not constitute
a guarantee of the accuracy or completeness of the information contained herein
or an endorsement of the merits of the Plan by the Bankruptcy Court.
 
Summaries of the Plan and statements made in this Disclosure Statement are
qualified in their entirety by reference to the Plan, the exhibits and schedules
attached to the Plan and this Disclosure Statement and the Plan Supplement.  The
statements contained in this Disclosure Statement are made only as of the date
of this Disclosure Statement, and there is no assurance that the statements
contained herein will be correct at any time after such date.  Except as
otherwise provided in the Plan or in accordance with applicable law, the Debtors
are under no duty to update or supplement this Disclosure Statement.
 
The information contained in this Disclosure Statement is included for purposes
of soliciting acceptances to, and confirmation of, the Plan and may not be
relied on for any other purpose.  The Debtors believe that the summary of
certain provisions of the Plan and certain other documents and financial
information contained or referenced in this Disclosure Statement is fair and
accurate.  The summaries of the financial information and the documents annexed
to this Disclosure Statement, including, but not limited to, the Plan and the
Plan Documents, or otherwise incorporated herein by reference, are qualified in
their entirety by reference to those documents.  In the
 
 
 
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event of any inconsistency between this Disclosure Statement and the Plan, the
relevant provision of the Plan, as it relates to such inconsistency, will
govern.
 
No representations concerning the Debtors or the value of the Debtors’ property
have been authorized by the Debtors other than as set forth in this Disclosure
Statement.  Any information, representations or inducements made to obtain
acceptance of the Plan, which are other than or inconsistent with the
information contained in this Disclosure Statement and in the Plan, should not
be relied on by any claim holder entitled to vote on the Plan.
 
This Disclosure Statement has not been approved or disapproved by the United
States Securities and Exchange Commission (the “SEC”) or any similar federal,
state, local or foreign regulatory agency, nor has the SEC or any other such
agency passed upon the accuracy or adequacy of the statements contained in this
Disclosure Statement.
 
The Debtors have sought to ensure the accuracy of the financial information
provided in this Disclosure Statement, but the financial information contained
in, or incorporated by reference into, this Disclosure Statement has not been
and will not be audited or reviewed by the Debtors’ independent auditors unless
explicitly provided otherwise.
 
Some of the securities described in this Disclosure Statement will be issued
without registration under the Securities Act of 1933, as amended (the
“Securities Act”), or similar federal, state, local or foreign laws, in reliance
on the exemption set forth in section 1145 of the Bankruptcy Code.  Other
securities may be issued pursuant to other applicable exemptions under the
federal securities laws.  To the extent exemptions from registration, other than
section 1145, apply, such securities may not be offered or sold except pursuant
to a valid exemption or upon registration under the Securities Act.
 
The Debtors make statements in this Disclosure Statement that are considered
forward-looking statements under the federal securities laws.  The Debtors
consider all statements regarding anticipated or future matters, including the
following, to be forward-looking statements:
 
· any future effects as a result of the pendency of the Chapter 11 Cases;
 
· the Debtors’ expected future financial position, liquidity, results of
operations, profitability and cash flows;
 
· projected dividends
 
· competitive position;
 
· business strategy;
 
· budgets;
 
· projected cost reductions;
 
· projected and estimated liability costs, including pension, retiree, tort and
environmental costs and costs of environmental remediation;
 
· results of litigation;
 
· disruption of operations;
 
· plans and objectives of management for future operations;
 
· contractual obligations;
 
· off-balance sheet arrangements;
 
· growth opportunities for existing products and services;
 
· projected price increases;
 
· projected general market conditions;
 
· benefits from new technology; and
 
· effect of changes in accounting due to recently issued accounting standards.
 

 

 
 
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Statements concerning these and other matters are not guarantees of the Debtors’
future performance.  Such statements represent the Debtors’ estimates and
assumptions only as of the date such statements were made.  There are risks,
uncertainties and other important factors that could cause the Debtors’ actual
performance or achievements to be materially different from those they may
project and the Debtors undertake no obligation to update any such
statement.  These risks, uncertainties and factors include:
 
· the Debtors’ ability to confirm and consummate the Plan;
 
· the Debtors’ ability to reduce their overall financial leverage;
 
· the potential adverse impact of the Chapter 11 Cases on the Debtors’
operations, management and employees, and the risks associated with operating
businesses in the Chapter 11 Cases;
 
· customer response to the Chapter 11 Cases;
 
· inability to have Claims discharged/settled during the Chapter 11 proceedings;
 
· the reinstatement and unimpairment of certain credit facilities, indentures
and notes may be challenged by the banks and/or other interested parties;
 
· our ability to comply with all covenants in our indentures and credit
facilities, any violation of which, if not cured in a timely manner, could
trigger defaults under and acceleration of our indebtedness and our other
obligations under cross-default provisions;
 
· the availability and access, in general, of funds to meet interest payment
obligations under our debt and to fund our operations and necessary capital
expenditures, either through cash on hand, cash flows from operating activities,
further borrowings or other sources and, in particular, our ability to fund debt
obligations (by dividend, investment or otherwise) to the applicable obligor of
such debt;
 
· our ability to repay debt prior to or when it becomes due and/or successfully
access the capital or credit markets to refinance that debt through new
issuances, exchange offers or otherwise, including restructuring our balance
sheet and leverage position, especially given recent volatility and disruption
in the capital and credit markets;
 
· the impact of competition from other distributors, including, but not limited
to, incumbent telephone companies, direct broadcast satellite operators,
wireless broadband providers, and digital subscriber line (“DSL”) providers;
 
· difficulties in growing and operating our telephone services, while adequately
meeting customer expectations for the reliability of voice services;
 
· our ability to adequately meet demand for installations and customer service;
 
· our ability to sustain and grow revenues and cash flows from operating
activities by offering video, high-speed Internet, telephone and other services,
and to maintain and grow our customer base, particularly in the face of
increasingly aggressive competition;
 
· our ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming costs;
 
· general business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy; and
 
· the effects of governmental regulation on our business.
 

Additional factors that could cause actual results to differ materially from the
forward-looking statements we make in this Disclosure Statement are set forth in
the reports or documents that we file from time to time with the SEC, including
our most recent Annual Report on Form 10-K filed with the SEC on March 16, 2009
(File No. 001-33664), including any amendments thereto, each of which is hereby
incorporated by reference herein.
 
 
 
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Questions and Answers Regarding this Disclosure Statement and the Plan
 
Why are the Debtors sending me this Disclosure Statement?
 
The Debtors are seeking to obtain Bankruptcy Court approval of the Plan.  Prior
to soliciting acceptances of the Plan, section 1125 of the Bankruptcy Code
requires the Debtors to prepare a Disclosure Statement containing adequate
information of a kind, and in sufficient detail, to enable a hypothetical
reasonable investor to make an informed judgment regarding acceptance of the
Plan.  This Disclosure Statement is being submitted in accordance with such
requirements.
 
Am I entitled to vote on the Plan?  What will I receive from the Debtors if the
Plan is consummated?
 
Your ability to vote and your distribution under the Plan, if any, depend on
what kind of Claim or Interest you hold.  A summary of the classes of Claims and
Interests and their respective voting statuses and anticipated recoveries is set
forth below.
 
The following chart is a summary of the classification and treatment of Claims
and Interests and the potential distributions under the Plan.  Any estimates of
Claims or Interests in this Disclosure Statement may vary from the final amounts
allowed by the Bankruptcy Court.  As a result of the foregoing and other
uncertainties which are inherent in the estimates, the estimated recoveries in
this Disclosure Statement may vary from the actual recoveries received.  In
addition, your ability to receive distributions under the Plan depends upon the
ability of the Debtors to obtain Confirmation of the Plan and meet the
conditions to the Effective Date of the Plan.  See “Confirmation of the Plan,”
which begins on page 90, for a discussion of the conditions to the Effectiveness
of the Plan.  The recoveries set forth below are projected recoveries only and
may change based upon changes in the amount of Allowed Claims as well as other
factors related to the Debtors’ business operations and general economic
conditions.  Reference should be made to this entire Disclosure Statement and
the Plan for a complete description of the classification and treatment of
Allowed Claims against and Interests in each of the Debtors.
 
Class
Claims and Interests
Status
Voting Rights
Estimated Recovery Under the Plan
CCI
A-1
Priority Non-Tax Claims against CCI
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
A-2
Secured Claims against CCI
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
A-3
General Unsecured Claims against CCI (other than all General Unsecured Claims
against CCI held by any CII Settlement Claim Party)
Impaired
Entitled to Vote
100%
A-4
CCI Notes Claims
Impaired
Entitled to Vote
19.4%
A-5
Section 510(b) Claims against CCI (other than all Section 510(b) Claims against
CCI held by any CII Settlement Claim Party)
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
A-6
Interests in CCI (other than all Interests in CCI held by any CII Settlement
Claim Party)
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CII
B-1
Priority Non-Tax Claims against CII
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%

 
 
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Class
Claims and Interests
Status
Voting Rights
Estimated Recovery Under the Plan
B-2
Secured Claims against CII
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
B-3
General Unsecured Claims against CII
Impaired
Entitled to Vote
100%
B-4
CII Shareholder Claims
Impaired
Entitled to Vote
 
Holdco, Enstar Communications Corporation, and Charter Gateway, LLC
C-1
Priority Non-Tax Claims against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
C-2
Secured Claims against Holdco, Enstar Communications Corporation, and Charter
Gateway, LLC
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
C-3
General Unsecured Claims against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC
Impaired
Entitled to Vote
100%
C-4
Holdco Notes Claims
Impaired
Entitled to Vote
3.9%
C-5
Section 510(b) Claims against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
C-6
Interests in Holdco, Enstar Communications Corporation, and Charter Gateway, LLC
(other than all Interests in Holdco held by any CII Settlement Claim Party)
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CCHC
D-1
Priority Non-Tax Claims against CCHC
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
D-2
Secured Claims against CCHC
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
D-3
General Unsecured Claims against CCHC (other than all General Unsecured Claims
against CCHC held by any CII Settlement Claim Party)
Impaired
Entitled to Vote
100%
D-4
Section 510(b) Claims against CCHC
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
D-5
Interests in CCHC
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CCH and Charter Communications Holdings Capital Corp.

 
 
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Class
Claims and Interests
Status
Voting Rights
Estimated Recovery Under the Plan
E-1
Priority Non-Tax Claims against CCH and Charter Communications Holdings Capital
Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
E-2
Secured Claims against CCH and Charter Communications Holdings Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
E-3
General Unsecured Claims against CCH and Charter Communications Holdings Capital
Corp.
Impaired
Entitled to Vote
100%
E-4
CCH Notes Claims
Impaired
Entitled to Vote
0.4%
E-5
Section 510(b) Claims against CCH and Charter Communications Holdings Capital
Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
E-6
Interests in CCH and Charter Communications Holdings Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CIH and CCH I Holdings Capital Corp.
F-1
Priority Non-Tax Claims against CIH and CCH I Holdings Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
F-2
Secured Claims against CIH and CCH I Holdings Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
F-3
General Unsecured Claims against CIH and CCH I Holdings Capital Corp.
Impaired
Entitled to Vote
100%
F-4
CIH Notes Claims
Impaired
Entitled to Vote
0.5%
F-5
Section 510(b) Claims against CIH and CCH I Holdings Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
F-6
Interests in CIH and CCH I Holdings Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CCH I and CCH I Capital Corp.
G-1
Priority Non-Tax Claims against CCH I and CCH I Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
G-2
Secured Claims against CCH I and CCH I Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
G-3
General Unsecured Claims against CCH I and CCH I Capital Corp.
Impaired
Entitled to Vote
100%
G-4
CCH I Notes Claims
Impaired
Entitled to Vote
12.7%
G-5
Section 510(b) Claims against CCH I and CCH I Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%

 
 
 
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Class
Claims and Interests
Status
Voting Rights
Estimated Recovery Under the Plan
G-6
Interests in CCH I and CCH I Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CCH II and CCH II Capital Corp.
H-1
Priority Non-Tax Claims against CCH II and CCH II Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
H-2
Secured Claims against CCH II and CCH II Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
H-3
General Unsecured Claims against CCH II and CCH II Capital Corp.
Impaired
Entitled to Vote
100%
H-4
CCH II Notes Claims
Impaired
Entitled to Vote
100%
H-5
Section 510(b) Claims against CCH II and CCH II Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
H-6
Interests in CCH II and CCH II Capital Corp.
Impaired
Not Entitled to Vote (Deemed to Reject)
0%
CCOH and CCO Holdings Capital Corp.
I-1
CCOH Credit Facility Claims
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
I-2
CCOH Notes Claims
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
I-3
Priority Non-Tax Claims against CCOH and CCO Holdings Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
I-4
Secured Claims against CCOH and CCO Holdings Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
I-5
General Unsecured Claims against CCOH and CCO Holdings Capital Corp.
Impaired
Entitled to Vote
100%
I-6
Interests in CCOH and CCO Holdings Capital Corp.
Unimpaired
Not Entitled to Vote (Deemed to Accept)
N/A
CCO and its direct and indirect subsidiaries (other than the CC VIII Preferred
Units held by Holders of CII Settlement Claims)
J-1
CCO Credit Facility Claims
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
J-2
CCO Swap Agreements Claims
Impaired
Entitled to Vote
100%
J-3
CCO Notes Claims
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
J-4
Priority Non-Tax Claims against CCO and its direct and indirect subsidiaries
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
J-5
Secured Claims against CCO and its direct and indirect subsidiaries
Unimpaired
Not Entitled to Vote (Deemed to Accept)
100%
J-6
General Unsecured Claims against CCO and its direct and indirect subsidiaries
Impaired
Entitled to Vote
100%

 
 
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Class
Claims and Interests
Status
Voting Rights
Estimated Recovery Under the Plan
J-7
Interests in CCO and its direct and indirect subsidiaries (other than CC VIII
Preferred Units held by a CII Settlement Claim Party)
Unimpaired
Not Entitled to Vote (Deemed to Accept)
N/A

 
In the ordinary course of the Debtors’ business, certain of the Debtors hold
Claims or other Interests in the form of intercompany Claims or Interests (the
“Intercompany Claims or Interests”).  The summary above includes Intercompany
Claims or Interests between certain Debtors, which may or may not be impaired
depending on which Debtors such Claims or Interests are against.
 
For more information about the treatment of Claims and Interests see “Treatment
of Claims Against and Interests in the Debtors,” which begins on page 32.
 
What happens to my recovery if the Plan is not confirmed, or does not go
effective?
 
In the event that the Plan is not confirmed, there is no assurance that the
Debtors will be able to reorganize their business.  If the Plan is not confirmed
in a timely manner, it is unclear whether the transactions contemplated thereby
could be implemented and what Holders of Claims and Interests would ultimately
receive in respect of their Claims and Interests.  It is possible that any
alternative may provide Holders of Claims or Interests with less than they would
have received pursuant to the Plan.  Moreover, nonconfirmation of the Plan may
result in an extended Chapter 11 proceeding.  For a more detailed description of
the consequences of this or of a liquidation scenario, see “Confirmation of the
Plan — Best Interests of Creditors/Liquidation Analysis,” which begins on page
91, and the Liquidation Analysis attached as Exhibit E to this Disclosure
Statement.
 
If the Plan provides that I get a distribution, do I get it upon Confirmation or
when the Plan goes effective, and what do you mean when you refer to
“Confirmation,” “Effective Date” and “consummation?”
 
“Confirmation” of the Plan refers to the approval of the Plan by the Bankruptcy
Court.  Confirmation of the Plan does not guarantee that you will receive the
distribution indicated under the Plan.  After Confirmation of the Plan by the
Bankruptcy Court, there are conditions that need to be satisfied or waived so
that the Plan can be consummated and go effective.  References to the “Effective
Date” mean the date that all conditions to the Plan have been satisfied or
waived and the Plan has been fully consummated.  Distributions will only be made
on the Effective Date or as soon as practicable thereafter.  See “Confirmation
of the Plan,” which begins on page 90, for a discussion of the conditions to
consummation.
 
Where is the cash required to fund the Plan coming from?
 
The cash required to fund the Plan will come from cash from operations, the sale
and issuance of up to $267 million aggregate principal amount of additional New
CCH II Notes and the proceeds of an offering of rights (the “Rights”) to
holders, as of the close of business on April 17, 2009, which is the date that
is 12 days prior to the date for which the Disclosure Statement hearing was
originally scheduled (the “Rights Offering Record Date”), of senior notes of
CCH I (“CCH I Notes”), or transferees of such holders, that have completed and
delivered an investor certification by May 11, 2009 and are accredited investors
(as defined under Rule 501 of the Securities Act) or qualified institutional
buyers (as defined in Rule 144A under the Securities Act) (together, the
“Eligible CCH I Notes Claim Holders”), to purchase shares of New Class A Stock
along with the issuance of shares of New Class A Stock to existing holders of
CCH I Notes as of such date and that have timely and affirmatively demonstrated
that they are not Eligible CCH I Notes Claim Holders (such offering of Rights
and issuance of shares, together, the “Rights Offering”).  Specifically, up to
approximately $1.6 billion in cash proceeds will be raised through the Rights
Offering and up to an additional $400 million in cash proceeds may be raised
through the Overallotment Option.  Certain holders of approximately $4.1 billion
in aggregate principal amount of notes issued by CCH I and CCH II (the
“Committed Parties”) have agreed to fully backstop the Rights Offering and have
committed to purchase the
 
 
 
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additional New CCH II Notes as described above (the “New CCH II Notes
Commitment”).  See “Important Aspects of the Plan,” which begins on page 24.
 
Are there risks to owning an interest in the Debtors upon emergence from
bankruptcy?
 
Yes, please see “Risk Factors,” which begins on page 76.
 
What are the terms of the New CCH II Notes?
 
The terms of the New CCH II Notes are described in “Description of the New
CCH II Notes,” which begins on page 62.
 
Is there potential litigation related to the Plan?
 
Yes, in the event it becomes necessary to confirm the Plan over the objection of
certain Classes, the Debtors may seek confirmation of the Plan notwithstanding
the dissent of certain Classes of Claims.  The Bankruptcy Court may confirm the
Plan pursuant to the “cramdown” provisions of the Bankruptcy Code, which allow
the Bankruptcy Court to confirm a plan that has been rejected by an impaired
Class of Claims if it determines that the Plan satisfies section 1129(b) of the
Bankruptcy Code.
 
In addition, certain creditors have challenged the reinstatement and
unimpairment of certain credit facilities, indentures and notes under, and other
aspects of, the Plan.  See “Summary of Legal Proceedings — Legal Proceedings in
Bankruptcy Court — Challenges to the Plan” which begins on page 68 and “Risk
Factors — Risks Relating to Bankruptcy — The Debtors May Not Be Able to Obtain
Confirmation of the Plan,” which begins on page 76.
 
Will CCI, during the Chapter 11 Cases, and the Reorganized Company thereafter,
continue filing reports with the SEC?
 
Yes, it is expected that CCI and the Reorganized Company will continue to file
periodic and other reports with the SEC.
 
Will the New Class A Stock be listed on any stock exchange?
 
The Reorganized Company will cause the New Class A Stock to be listed on the
NASDAQ Global Select Market as promptly as practicable but in no event prior to
the later of (x) the 46th day following the Effective Date and (y) October 15,
2009 (unless Paul G. Allen and the Reorganized Company agree to an earlier
date), and the Reorganized Company will maintain such listing thereafter.
 
Who will receive the Reorganized Company’s capital stock and what rights will
the Reorganized Company’s new stockholders have?
 
New Class A Stock.  Shares of New Class A Stock will be issued to
(a) participants in the Rights Offering (in the case of an Eligible CCH I Notes
Claim Holder, upon the exercise of its Rights), (b) Equity Backstop Parties upon
the exercise of the Overallotment Option, (c) Holders of Claims with respect to
the CCH I Notes, (d) the Allen Entities upon exchange of their Reorganized
Holdco equity pursuant to the reorganized Holdco Exchange Agreement, to be
entered into by the Reorganized Company, reorganized Holdco, reorganized CII and
Mr. Allen (the “Reorganized Holdco Exchange Agreement”), (e) holders of Warrants
upon any exercise of such Warrants, and (f) holders of equity-based awards
issued under the Management Incentive Plan, in each case in the respective
amounts described in the Plan.  Under the Plan, approximately 19.5% of the New
Class A Stock will be distributed to CCH I Notes Claim Holders and approximately
80.5% of the New Class A Stock will be sold pursuant to the Rights Offering
(which percentages do not give effect to any exercise of the CCH Warrants, CIH
Warrants, or CII Settlement Claim Warrants or the Overallotment Option).  See
“The Reorganized Company’s Ownership Upon Emergence,” which begins on page
67.  Except as otherwise provided in the Reorganized Company’s amended and
restated certificate of incorporation (the “Amended and Restated Certificate of
Incorporation”), each share of New Class A Stock will be entitled to one vote.
 
 
 
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New Class B Stock.  The New Class B Stock will be identical to the New Class A
Stock except with respect to certain voting, transfer and conversion
rights.  Each share of New Class B Stock will be entitled to a number of votes
such that the aggregate number of votes attributable to the shares of New Class
B Stock will at all times equal 35% of the combined voting power of the capital
stock of the Reorganized Company.  Subject to the Lock-Up Agreement, each share
of New Class B Stock will be convertible into one share of New Class A Stock at
the option of the Holder.  In addition, each share of New Class B Stock will be
convertible into one share of New Class A Stock (i) at any time on or after
January 1, 2011 and until September 15, 2014, at the election of a majority of
the disinterested members of the Board of Directors, and (ii) at any time on or
after September 15, 2014 at the election of a majority of the members of the
Board of Directors (other than members of the Board of Directors elected by the
holders of New Class B Stock).  New Class B Stock will only be issued to and can
only be held by the Authorized Class B Holders.  New Class B Stock will be
subject to restrictions on conversion and transfer as set forth in the Lock-Up
Agreement to be entered into between the Reorganized Company and Mr. Allen (the
“Lock-Up Agreement”).  See “Important Aspects of the Plan — Lock-Up Agreement”
on page 28.
 
New Preferred Stock.  Shares of New Preferred Stock will be issued to Holders of
CCI Notes in the respective amounts described in the Plan.  The New Preferred
Stock will not be publicly listed or traded.
 
Warrants.  Warrants to be issued pursuant to the Plan will consist solely of CIH
Warrants, CCH Warrants and CII Settlement Claim Warrants.
 
See “Description of Capital Stock,” which begins on page 64.
 
Will there be releases granted to parties in interest as part of the Plan?
 
Yes, see “Releases,” which begins on page 96.
 
What are the contents of the solicitation packages to be sent to creditors who
are eligible to vote on the Plan?
 
In accordance with the terms of the Bankruptcy Court order approving this
Disclosure Statement, all parties in interest will receive a notice of the
hearing on the Confirmation of the Plan.  Additionally, holders of Claims who
are eligible to vote on the Plan will receive this Disclosure Statement,
including the exhibits attached hereto, and ballots to vote in respect of their
Claims.  In addition, Eligible CCH I Notes Claim Holders will receive a separate
solicitation package, which will contain the Rights Offering Documents.
 
           The notices sent to parties in interest will indicate that this
Disclosure Statement, the Plan (including the Plan Supplement) and all of the
exhibits thereto are (and in the case of any other supplement to the Plan will
be) available for viewing by any party at: www.kccllc.net/charter.
 
How do I vote for or against the Plan?
 
This Disclosure Statement, accompanied by a ballot or ballots to be used for
voting on the Plan, is being distributed to the holders of Claims and Interests
entitled to vote on the Plan.  If you are a holder of Claims or Interests in the
following classes (collectively, the “Voting Classes”), you may vote for or
against the Plan by completing the ballot and returning it in the envelope
provided:
 
Class A-3 (General Unsecured Claims against CCI)
Class A-4 (CCI Notes Claims)
Class B-3 (General Unsecured Claims against CII)
Class B-4 (CII Shareholder Claims)
Class C-3 (General Unsecured Claims against Holdco, Enstar Communications
Corporation, and Charter Gateway LLC)
Class C-4 (Holdco Notes Claims)
Class D-3 (General Unsecured Claims against CCHC)
Class E-3 (General Unsecured Claims against CCH and Charter Communications
Holdings Capital Corp.)
Class E-4 (CCH Notes Claims)
Class F-3 (General Unsecured Claims against CIH and CCH I Holdings Capital
Corp.)
 
 
 
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Class F-4 (CIH Notes Claims)
Class G-3 (General Unsecured Claims against CCH I and CCH I Capital Corp.)
Class G-4 (CCH I Notes Claims)
Class H-3 (General Unsecured Claims against CCH II and CCH II Capital Corp.)
Class H-4 (CCH II Notes Claims)
Class I-5 (General Unsecured Claims against CCOH and CCO Holdings Capital Corp.)
Class J-2 (CCO Swap Agreements Claims)
Class J-6 (General Unsecured Claims against CCO and its direct and indirect
subsidiaries)
 
The Debtors, with the approval of the Bankruptcy Court, have engaged Financial
Balloting Group, LLC to serve as the voting agent for Claims in respect of debt
securities and to assist CCI with the subscription process in connection with
the Rights Offering (the “Securities Voting Agent” or “Subscription Agent,” as
applicable), and Kurtzman Carson Consultants LLC to serve as the voting agent
with respect to any other Claims (the “Claims Voting Agent”) and to assist in
the solicitation process.  The Claims Voting Agent and the Securities Voting
Agent will, among other things, answer questions, provide additional copies of
all solicitation materials, and generally oversee the solicitation process for
their assigned Claims.  The Claims Voting Agent and the Securities Voting Agent
will also process and tabulate ballots for each of their respective Classes that
are entitled to vote to accept or reject the Plan and will file a voting report
as soon as practicable before the Confirmation Hearing.
 
Detailed instructions regarding how to vote on the Plan are contained on the
ballots and related voting instructions distributed to Holders of Claims that
are entitled to vote on the Plan.  In addition, see “Voting Instructions,” which
begins on page 99.
 
What is the deadline to vote on the Plan?
 
All ballots or master ballots must be received on or before 5:00 p.m. (Eastern
Time) on [●], 2009 (the “Voting Deadline”) by:
 
The Securities Voting Agent for Claims in respect of debt securities; and
 
The Claims Voting Agent for any other Claims.
 
Who can participate in the Rights Offering?
 
Pursuant to the Rights Offering Procedures Eligible CCH I Notes Claim Holders
will have the opportunity to purchase their pro rata share of Rights to purchase
New Class A Stock.
 
How do I elect to participate in the Rights Offering?
 
An investor certification is being distributed to the Holders of CCH I Notes
Claims as of as the Rights Offering Record Date.  Only Holders of CCH I Notes
Claims that timely complete the certification and are otherwise Eligible CCH I
Notes Claim Holders, which includes certain eligible transferees, will be
entitled to participate in the Rights Offering.  If it is determined that you
are an Eligible CCH I Notes Claim Holder, you will receive additional materials
instructing you how to participate in the Rights Offering.
 
What is the deadline to submit an election to participate in the Rights
Offering?
 
All rights exercise forms, which will be included in the packages of additional
materials to be sent to Eligible CCH I Notes Claim Holders must be received by
the Securities Voting Agent on or before 5:00 p.m. (Eastern Time) on [●], 2009.
 
What will holders of CCH I Notes Claims that are not Eligible CCH I Notes Claim
Holders receive in respect of their CCH I Notes Claims?
 
Each Holder of CCH I Notes Claims that affirmatively represents it is not an
Eligible CCH I Notes Claim Holder on a timely submitted investor certification
shall receive an amount of New Class A Stock equal to the value of the Rights
that such Holder would have been offered if it were an accredited investor or
qualified institutional
 
 
 
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buyer participating in the Rights Offering.  The value of a Right will be
determined (based on the difference between the aggregate equity purchase price
of New Class A Stock embedded in a Right and the value of New Class A Stock at
the termination of the Rights Offering (assuming that the Overallotment Option
is exercised in full, subject to subsequent upward adjustment to the extent not
exercised in full) that can be purchased upon exercise of a Right) by CCI in
good faith and in consultation with its financial advisor.  The value
determination will be filed within 10 days of the termination of the Rights
Offering with the Bankruptcy Court (assuming that the Overallotment Option is
exercised in full, subject to subsequent upward adjustment to the extent not
exercised in full) that can be purchased upon exercise of a Right), and notice
thereof (which shall include the value of each Right so determined) shall be
delivered to each such Holder that timely certified it is not an Eligible CCH I
Notes Claim Holder within five days of CCI's determination.  Holders receiving
notice shall have 10 days following receipt of such notice to file a challenge
to such notice with the Bankruptcy Court, whose determination of such value
shall be binding.
 
Why is the Bankruptcy Court holding a confirmation hearing?
 
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a
hearing on confirmation of the Plan.  Section 1128(b) of the Bankruptcy Code
provides that any party in interest may object to confirmation of the Plan.
 
When is the confirmation hearing set to occur?
 
The Bankruptcy Court has scheduled the confirmation hearing for [●], 2009 to
take place at [●] (Eastern Time) before the Honorable [●], United States
Bankruptcy Judge, in the United States Bankruptcy Court for the Southern
District of New York, located at Alexander Hamilton Custom House, One Bowling
Green, New York, New York, 10004.  The confirmation hearing may be adjourned
from time to time without further notice except for an announcement of the
adjourned date made at the confirmation hearing or any adjournment thereof.
 
Objections to Confirmation of the Plan must be filed and served on the Debtors,
and certain other parties, by no later than [●], 2009 at 5:00 p.m. (Eastern
Time) in accordance with the notice of the confirmation hearing that accompanies
this Disclosure Statement.  Unless objections to Confirmation of the Plan are
timely served and filed in compliance with the disclosure statement order, which
is attached to this Disclosure Statement as Exhibit B, they might not be
considered by the Bankruptcy Court.
 
The Debtors will publish the notice of the confirmation hearing, which will
contain the deadline for objections to the Plan and the date and time of the
confirmation hearing, in the national edition of The Wall Street Journal, USA
Today and the St. Louis Post-Dispatch to provide notification to those persons
who may not receive notice by mail.
 
What is the purpose of the confirmation hearing?
 
The consummation of a plan of reorganization is the principal objective of a
Chapter 11 case.  The confirmation of a plan of reorganization by the Bankruptcy
Court binds the debtor, any issuer of securities under the plan of
reorganization, any person acquiring property under the plan of reorganization,
any creditor or equity interest holder of a debtor and any other person or
entity as may be ordered by the Bankruptcy Court in accordance with the
applicable provisions of the Bankruptcy Code.  Subject to certain limited
exceptions, the order issued by the Bankruptcy Court confirming a plan of
reorganization discharges a debtor from any debt that arose prior to the
confirmation of the plan of reorganization and provides for the treatment of
such debt in accordance with the terms of the confirmed plan of reorganization.
 
What role does the Bankruptcy Court play after the confirmation hearing?
 
After the Plan is confirmed, the Bankruptcy Court will still have exclusive
jurisdiction over all matters arising out of, or related to, the Chapter 11
Cases and the Plan, including disputes over any Claims or Interests arising
under the Chapter 11 Cases.  In addition, the Bankruptcy Court will have
exclusive jurisdiction to ensure that distributions to holders of Claims are
accomplished pursuant to the Plan.  See “Effects of Confirmation of the Plan —
Retention of Jurisdiction by the Bankruptcy Court,” which begins on page 94 for
a further description of the matters over which the Bankruptcy Court will retain
jurisdiction following the confirmation of the Plan.
 
 
 
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What is the effect of the Plan on the Debtors’ ongoing business?
 
The Debtors are reorganizing pursuant to Chapter 11 of the Bankruptcy Code.  As
a result, the confirmation of the Plan means that the Debtors will not be
liquidated or forced to go out of business.  As more fully described in “The
Reorganized Debtors Upon Emergence,” beginning on page 58, the Debtors will
continue to operate their businesses going forward utilizing cash from
operations and cash received from the restructuring transactions described in
this Disclosure Statement and the Plan.
 
Will Any Party Have Significant Influence Over the Corporate Governance and
Operations of the Reorganized Company?
 
Yes.  After the Effective Date, Mr. Allen and entities affiliated with Mr.
Allen, will hold 35% of the combined voting power of the capital stock of the
Reorganized Company and will have the right to elect four of 11 members of the
Board of Directors.  There may be additional holders of significant voting power
in the Reorganized Company, though pursuant to the Amended and Restated
Certificate of Incorporation, prior to September 15, 2014, the votes
attributable to each share of New Class A Stock held by any holder (other than
Mr. Allen and certain of his affiliates) will be automatically reduced pro rata
among all shares of New Class A Stock held by such holder and (if applicable)
shares of New Class A Stock held by any other holder (other than Mr. Allen and
certain of his affiliates) included in any “person” or “group” with such holder
so that no “person” or “group” (other than Mr. Allen and certain of his
affiliates) is or becomes the holder or beneficial owner (as such term is used
in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular “person” (as such term is used in
Section 13(d) of the Exchange Act) such “person” shall be deemed to have
beneficial ownership of all securities that such “person” has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
34.9% of the combined voting power of the capital stock of the Reorganized
Company, subject to waiver by the disinterested members of the Board of
Directors as provided in the Amended and Restated Certificate of
Incorporation.  We refer to this voting power limitation as the “Voting
Threshold.”
 
Does the Company recommend voting in favor of the Plan?
 
Yes.  In the opinion of the Debtors, the Plan is preferable to liquidation under
Chapter 7 of the Bankruptcy Code, as described in this Disclosure Statement, and
any other reasonably available alternative because the Debtors believe the Plan
provides for a larger distribution to the Debtors’ creditors than would
otherwise result from a liquidation or any other reasonably available
alternative.  In the event of a liquidation, recoveries for Holders of Allowed
Claims would be significantly reduced, if not eliminated, and no recovery would
be expected for Holders of General Unsecured Claims. Accordingly, the Debtors
recommend that holders of Claims and Interests who are entitled to vote on the
Plan support Confirmation of the Plan and vote to accept the Plan.
 
 
 
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Our History and Our Chapter 11 Cases
 
 The Debtors’ Business
 
The Debtors operate broadband communications businesses in the United States
with approximately 5.5 million customers at December 31, 2008.  The Debtors
offer to residential and commercial customers traditional cable video
programming (basic and digital video), high-speed Internet services, and
telephone services, as well as advanced broadband services such as high
definition television, Charter OnDemand™, and digital video recorder (“DVR”)
service.  The Debtors sell their cable video programming, high-speed Internet,
telephone, and advanced broadband services primarily on a subscription
basis.  They also sell advertising to national and local clients on advertising
supported cable networks.
 
As of December 31, 2008, the Debtors served approximately 5.0 million video
customers, of which approximately 3.1 million were also digital video
customers.  The Debtors also served approximately 2.9 million high-speed
Internet customers and provided telephone service to approximately 1.3 million
customers.
 
The Debtors’ customers are served through a hybrid fiber and coaxial cable
network with 95% of homes passed at 550 MHZ or greater and 95% of plant miles
two-way active.  The Debtors provide scalable, tailored  broadband
communications solutions to business organizations, such as business-to-business
Internet access, data networking, video and music entertainment services, and
business telephone.  The Debtors also provide advertising solutions to local,
national, and regional businesses that target video customers.
 
The Debtors’ corporate office, which includes employees of CCI, is responsible
for coordinating and overseeing overall operations, including establishing
company-wide policies and procedures.  The corporate office performs certain
financial and administrative functions on a centralized basis and performs these
services on a cost reimbursement basis pursuant to a management services
agreement between CCO and CCI, which entitles CCI to payment for its performance
of various personnel, operational and financial functions.  The Debtors’ field
operations are managed within two operating groups.
 
The Debtors have a history of net losses.  The Debtors’ net losses are
principally attributable to insufficient revenue to cover the combination of
operating expenses and interest expenses they incur because of their high
amounts of debt, and depreciation expenses resulting from the capital
investments they have made and continue to make in their cable properties.
 
As of the Petition Date, the Debtors had approximately 16,500 employees, of
which approximately 100 employees were represented by collective bargaining
agreements.  For the year ended December 31, 2008, the Debtors’ total revenues
were approximately $6.5 billion.  The Debtors derive revenues largely from the
monthly fees customers pay for the Debtors’ services.  The prices the Debtors
charge for their products and services vary based on the level of service the
customer chooses and the geographic market.  The Debtors’ corporate headquarters
are located at 12405 Powerscourt Drive, St. Louis, Missouri 63131.  For more
information regarding the Debtors’ business, see CCI’s Annual Report on Form
10-K for the fiscal year ended December 31, 2008, filed with the SEC on March
16, 2009.
 
 Corporate Organizational Structure
 
CCI is a holding company whose principal asset at February 28, 2009 is its 54%
equity interest (53% for accounting purposes) in Charter Communications Holdings
Company, LLC (“Holdco”), the direct parent of CCHC, LLC (“CCHC”).  CCI is the
managing member of Holdco.  CCI also holds certain indebtedness of Holdco that
mirrors the terms of securities issued by CCI.  CCI’s only business is to act as
the managing member of Holdco and its subsidiaries.  As the managing member of
Holdco, CCI controls the affairs of Holdco and its limited liability company
subsidiaries, including Charter Communications Holdings, LLC (“CCH”).
 
CCH, including its direct and indirect subsidiaries CIH, CCH I, LLC (“CCH I”),
CCH II, LLC (“CCH II”), CCO Holdings, LLC (“CCOH”), and CCO, through the
operating subsidiaries of CCO, operate the Debtors’ broadband business.  Charter
Communications Holdings Capital Corp. (“Charter Capital”), CCH I Holdings
Capital Corp., CCH I Capital Corp., CCH II Capital Corp, CCO Holdings Capital
Corp., and Charter Communications Operating Capital Corp. are wholly-owned
subsidiaries of CCH, CIH, CCH I, CCH II, CCOH, and CCO,
 
 
 
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respectively, and were formed and exist solely as co-issuers of the debt issued
with their parent companies,  CCH, CIH, CCH I,  CCH II, CCOH, and CCO,
respectively.
 
Mr. Allen owns 100% of Charter Investment, Inc. (“CII”) and controls CCI through
a voting control interest of approximately 91.1% as of February 28, 2009.  In
addition to directly owning shares of CCI’s Class A common stock and Class B
common stock, Mr. Allen indirectly owns, through CII, approximately 46% of
Holdco’s common equity interests and a note issued by CCHC exchangeable into
Holdco membership units.  CII’s membership units in Holdco are exchangeable at
any time for shares of CCI’s Class B common stock on a one-for-one basis, which
shares are in turn convertible into CCI’s Class A common stock on a one-for-one
basis.  Mr. Allen would hold, directly and indirectly, a common equity interest
in CCI of approximately 52.2% on an as-exchanged basis as of February 28, 2009.
Each share of CCI Class A common stock is entitled to one vote.  Through his
ownership of CCI’s Class B common stock, Mr. Allen is entitled to ten votes for
each share of CCI’s Class B common stock and for each membership unit in Holdco
held by him and his affiliates.  Mr. Allen also indirectly owns through CII 30%
of the Class A preferred membership interests of CC VIII, LLC (“CC VIII”), an
indirect subsidiary of CCO.
 
The chart on the following page sets forth the Debtors’ organizational
structure. This chart does not include all of the Debtors’ affiliates and
subsidiaries and, in some cases, the Debtors have combined separate entities for
presentation purposes. The equity ownership and voting percentages shown below
are approximations as of February 28, 2009, and do not give effect to any
exercise, conversion or exchange of then outstanding options, convertible notes,
and other convertible or exchangeable securities.  Indebtedness amounts shown
below are accreted values for financial reporting purposes as of December 31,
2008 and do not give effect to any debt eliminated in consolidation.  See “The
Debtors’ Pre-Petition Capital Structure,” which begins on page 18, and which
also includes the principal amount of the indebtedness described below.
 
 
 
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Org Chart [prepetitionorgchart.jpg]
 
 
 
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(1) Charter Communications, Inc. (“CCI”):
5.875% convertible senior notes due November 16, 2009  ($3.0 million*)
6.5% convertible senior notes due October 1, 2027 ($373 million)

Guarantee/Security Interest:  None.

(2) Charter Investment, Inc. (“CII”):
Includes CII’s interest in Holdco as successor by merger to Vulcan Cable III
Inc.

(3) CCHC, LLC (“CCHC”):
14% subordinated accreting note due 2020 ($75 million) (the “CCHC Note”).  The
CCHC Note is exchangeable at CII’s option, at any time, for Class A common units
of Holdco at a rate equal to the then-accreted value, divided by $2.00.  Holdco
Class A common units are exchangeable for shares of CCI’s Class B common stock,
which shares are in turn convertible into CCI’s Class A common stock.

(4) Charter Communications Holdings, LLC (“CCH”):
10% senior notes due April 1, 2009 ($53 million)
10.75% senior notes due October 1, 2009 ($4 million)
9.625% senior notes due November 15, 2009 ($25 million)
10.25% senior notes due January 15, 2010 ($1 million)
11.75% senior discount notes due January 15, 2010 ($1 million)
11.125% senior notes due January 15, 2011 ($47 million)
13.5% senior discount notes due January 15, 2011 ($60 million)
9.92% senior discount notes due April 1, 2011 ($51 million)
10% senior notes due May 15, 2011 ($69 million)
11.75% senior discount notes due May 15, 2011 ($54 million)
12.125% senior discount notes due January 15, 2012  ($75 million)

Guarantee/Security Interest:  None.

(5) CCH I Holdings, LLC (“CIH”):
11.125% senior notes due January 15, 2014 ($151 million)
13.5% senior discount notes due January 15, 2014 ($581 million)
9.92% senior discount notes due April 1, 2014 ($471 million)
10% senior notes due May 15, 2014  ($299 million)
11.75% senior discount notes due May 15, 2014 ($815 million)
12.125% senior discount notes due January 15, 2015 ($217 million)

Guarantee:  All six series of notes are guaranteed on a senior unsecured basis
by CCH.
Security Interest: None.

(6) CCH I, LLC (“CCH I”):
11% senior secured notes due October 1, 2015 ($4,072 million)

Guarantee:  The notes are guaranteed on a senior unsecured basis by Charter
Holding.
Security Interest: The notes are secured by a pledge of 100% of the equity
interest of CCH I’s wholly owned direct subsidiary, CCH II, and by a pledge of
CCH I’s 70% interest equal to 16,991,760 Class A preferred membership units of
CC VIII, and the proceeds thereof.

(7) CCH II, LLC (“CCH II”):
10.25% senior notes due September 15, 2010 ($1,857 million) (the “CCH II 2010
Notes”)
10.25% senior notes due October 1, 2013 ($598 million) (the “CCH II 2013 Notes”
and together with the CCH II 2010 Notes, the “CCH II Notes”)

Guarantee:  The notes due October 2013 are guaranteed on a senior unsecured
basis by CCH.
Security Interest:  None.

(8) CCO Holdings, LLC (“CCOH”):
8 ¾% senior notes due November 15, 2013 ($796 million)
CCOH Credit Facility ($350 million)

Guarantee:  None.
Security Interest: The obligations of CCOH under the CCOH Credit Facility are
secured by a junior lien on CCOH’s equity interest in CCO and all proceeds of
such equity interest, junior to the liens of the holders of the notes listed
under item (9) below.

(9) Charter Communications Operating, LLC (“CCO”):
8% senior second-lien notes due April 30, 2012 ($1,100 million)
83/8% senior second-lien notes due April 30, 2014 ($770 million)
10.875% senior second-lien notes due September 15, 2014 ($527 million)
CCO Credit Facility ($8,246 million)
 
 
 
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Guarantee:  All CCO notes are guaranteed by CCOH and those subsidiaries of CCO
that are guarantors of, or otherwise obligors with respect to, indebtedness
under the CCO Credit Facility.  The CCO Credit Facility is guaranteed by CCOH
and certain subsidiaries of CCO.
Security Interest:  The CCO notes and related note guarantees are secured by a
second-priority lien on substantially all of CCO’s and certain of its
subsidiaries’ assets that secure the obligations of CCO or any subsidiary of CCO
with respect to the CCO Credit Facility.   The CCO Credit Facility is secured by
a first-priority lien on substantially all of the assets of CCO and its
subsidiaries and a pledge by CCOH of its equity interests in CCO.

--------------------------------------------------------------------------------

*All amounts represent accreted values for financial reporting purposes
outstanding as of December 31, 2008
 
Charter Communications Holding Company, LLC. Holdco, a Delaware limited
liability company formed on May 25, 1999, is the direct 100% parent of CCHC.  As
of February 28, 2009, the common membership units of Holdco are owned
approximately 54% by CCI and 46% by CII.  All of the outstanding common
membership units in Holdco held by CII are controlled by Mr. Allen and are
exchangeable on a one-for-one basis at any time for shares of Class B common
stock of CCI, which are in turn convertible into Class A common stock of CCI on
a one-for-one basis.  CCI is the managing member of Holdco.
 
CCHC, LLC. CCHC, a Delaware limited liability company formed on October 25,
2005, is the direct 100% parent of CCH and is the issuer of an accreting note
held by CII, which is exchangeable into membership units in Holdco.
 
Interim Holding Company Debt Issuers. As indicated in the organizational chart
above, our interim holding company debt issuers indirectly own the subsidiaries
that own or operate all of our cable systems, subject to a minority interest in
the CC VIII preferred membership interests held by CII as described below.   For
a description of the debt issued by these issuers please see “The Debtors’
Pre-Petition Capital Structure,” below.
 
Preferred Equity in CC VIII. CII owns 30% of the CC VIII preferred membership
interests.  CCH I, a direct subsidiary of CIH, directly owns the remaining 70%
of these preferred interests, and such interests, among other collateral, secure
the notes issued by CCH I.  The common membership interests in CC VIII are
indirectly owned by CCO.
 
CII Capital Stock and Promissory Notes. Mr. Allen directly owns 100% of CII’s
capital stock.  As of the Petition Date, CII has 171,844.229639 shares of Class
A Voting Common Stock, par value $0.01 per share, issued and outstanding.  In
addition, between 2000 and 2006, CII and its predecessors in interest issued
several promissory notes to Mr. Allen in exchange for loans.
 
 The Debtors’ Pre-Petition Capital Structure
 
As of the Petition Date, the total consolidated debt obligations of the Debtors,
not including CII, were approximately $21.7 billion and consisted of, among
other things, revolving credit, institutional term loans and secured and
unsecured notes payable.  The major components of the Debtors’ consolidated
funded debt obligations are described in greater detail below.
 
 The CCO Credit Facility
 
On March 6, 2007, CCO entered into the CCO Credit Facility.  The CCO Credit
Facility consists of a  $6.5 billion term loan with a final maturity of March 6,
2014 and a $1.5 billion revolving credit facility that matures on March 6,
2013.  In March 2008, CCO borrowed $500 million in principal amount of an
incremental term loan with a final maturity date of March 6, 2014.  The CCO
Credit Facility allows for CCO to enter into additional incremental term loans
in the aggregate amount of up to an additional $500 million.  The CCO Credit
Facility is secured by a lien on substantially all of the assets of CCO and its
subsidiaries and a pledge by CCOH of its equity interests in CCO.  As of
February 28, 2009, approximately $44.6 million remains available under the
revolving portion of the CCO Credit Facility.
 
From time to time, CCO has entered into certain interest expense hedging
agreements (each a “Specified Hedge Agreement”) with certain non-Debtor
counterparties who were at the time of the relevant transaction lenders or
affiliates of such lenders under the CCO Credit Facility.  The Debtors’
obligations under the Specified Hedge Agreements also constitute secured
obligations under the CCO Credit Facility and share in the pledged collateral.
 
 
 
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Letters of Credit
 
The Debtors also had approximately $140 million in letters of credit as of
February 28, 2009, issued primarily to their various worker’s compensation,
property and casualty, and general liability carriers, as collateral for
reimbursement of claims.  These letters of credit reduce the amount the Debtors
may borrow under the CCO Credit Facility.
 
 The CCOH Credit Facility
 
On March 6, 2007, CCOH entered into the credit agreement, dated as of March 6,
2007, by and among CCOH, as borrower, Bank of America, N.A., as administrative
agent, and certain lenders thereto (the “CCOH Credit Facility”).  The CCOH
Credit Facility consists of a $350 million term loan that matures on September
6, 2014.  Additionally, under the CCOH Credit Facility, CCOH may enter into
incremental term loans from time to time.  Obligations under the CCOH Credit
Facility are secured by CCO’s equity interests and are structurally subordinated
to CCO’s obligations under the CCO Credit Facility and CCO’s notes.
 
 Interest Rate Swap Agreements
 
Certain Debtors use interest rate swap agreements to manage their interest costs
and reduce their exposure to increases in floating interest rates.  Using
interest rate swap agreements, such Debtors agree to exchange, at specified
intervals through 2013, the difference between fixed and variable interest
amounts calculated by reference to agreed-upon notional principal amounts.  At
the counterparties’ option, certain interest rate swap agreements may be
extended through 2014.  After the Petition Date, the counterparties to the
interest rate swap agreements will have the option to terminate the underlying
contract and, upon emergence of the Debtors from bankruptcy, receive payment for
the market value of the interest rate swap agreement as measured on the date a
counterparty so terminates.  The Debtors have received termination notices from
all of the counterparties to the interest rate swap agreements.
 
Outstanding Notes
 
CCI and certain of its subsidiaries have issued 26 series of notes with
approximately $13 billion total aggregate principal amount outstanding as of
February 28, 2009.
 
 Common Stock and Common Stock Derivatives
 
Prior to the Petition Date, CCI’s Class A common stock traded on the NASDAQ
Stock Market (the “NASDAQ”) under the ticker symbol “CHTR.”  As of February 28,
2009, CCI had 400,801,768 shares of Class A common stock, par value $0.001 per
share, issued and outstanding, and 50,000 shares of Class B common stock, par
value $0.001 per share, issued and outstanding.
 
 CC VIII Preferred
 
CII owns 30% of the CC VIII preferred membership interests.  CCH I directly owns
the remaining 70% of these preferred interests.  The common membership interests
in CC VIII are indirectly owned by CCO.
 
 Events that Led to Bankruptcy
 
A number of factors have contributed to the Debtors’ decision to file the
Chapter 11 Cases.   Key among these factors is the Debtors’ significant
indebtedness and the adverse changes in the capital markets, which have severely
limited the Debtors’ ability to recapitalize or otherwise enter into
transactions to ease their debt burdens.  Notably, the Debtors, not including
CII, have $21.7 billion in funded debt as of December 31, 2008.  The Debtors
have historically depended, in part, on their ability to borrow under their
credit facilities and to issue debt and equity securities to fund the
significant cash required for debt service costs, capital expenditures, and
ongoing operations.  Accordingly, such a debt level severely limits the Debtors’
ability to develop and offer new products and to effectively implement their
business plan.
 
 
 
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Pre-Petition Attempts to Improve the Debtors’ Financial Outlook
 
 Debt Refinancings
 
From 2003 to 2008, the Debtors continued to pursue opportunities to improve
their liquidity. Their efforts in this regard resulted in the completion of a
number of financing transactions, as follows:
 
On September 23, 2003, CCI and CCH II exchanged $609 million principal amount of
convertible senior notes issued by CCI, $1.3 billion principal amount of senior
notes and senior discount notes issued by CCH, for an aggregate of $1.6 billion
principal amount of 10.250% notes due 2010 issued by CCH II, in addition to the
sale of $30 million principal amount of 10.250% notes due 2010 issued by CCH II
for an equivalent amount of cash, in a private debt exchange offer with
“qualified institutional buyers,” as defined by Rule 144A of the Securities Act,
exempt from registration under the Securities Act.
 
On September 28, 2005, CIH, CCH I, and CCH exchanged $3.4 billion aggregate
principal amount of senior notes and senior discount notes due 2009-2010 and
$3.5 billion aggregate principal amount of senior notes and senior discount
notes due 2011-2012 issued by CCH, for $3.5 billion principal amount of 11.000%
senior secured notes due 2015 issued by CCH I and approximately $2.5 billion in
principal amount of various series of senior accreted notes due 2014 and 2015 of
CCH I, in a private debt exchange offer with “qualified institutional buyers,”
as defined by Rule 144A of the Securities Act, exempt from registration under
the Securities Act.
 
On September 14, 2006, CCHC and CCH II exchanged $450 million principal amount
of the aggregate $862.5 million principal amount outstanding of CCI’s 5.875%
convertible senior notes due 2009 tendered for exchange by holders of such
notes, for $188 million in cash, 45 million shares of CCI’s Class A common stock
and $146 million principal amount of 10.250% senior notes due 2010 issued by
CCH II and CCH II Capital Corp., plus accrued interest, pursuant to a
registration statement on Form S-4 originally filed with the SEC on August 11,
2006.
 
On September 14, 2006, the Debtors exchanged $797 million principal amount of
senior notes due 2009-2010 and 2011-2012 of CCH, for $250 million principal
amount of 10.250% senior notes due 2013 issued by CCH II and CCH II Capital
Corp. and $462 million principal amount of 11.000% senior secured notes due 2015
issued by CCH I, in a private debt exchange offer with “qualified institutional
buyers,” as defined by Rule 144A of the Securities Act, exempt from registration
under the Securities Act.
 
On March 6, 2007, CCI’s subsidiary, CCO, entered into the CCO Credit Facility
which provided a $1.5 billion senior secured revolving line of credit that
matures on March 6, 2013, a continuation of the existing $5.0 billion term loan
facility that matures on April 28, 2013, and a new $1.5 billion term loan
facility and additional incremental term loans of up to $1 billion that mature
on March 6, 2014.
 
On March 6, 2007, CCI’s subsidiary, CCOH, entered into the CCOH Credit Facility
consisting of a $350 million term loan facility maturing September 2014.
 
In April 2007, CCH completed a cash tender offer and purchase of $97 million of
CCH’s outstanding notes and redeemed $187 million of CCH’s 8.625% senior notes
due April 1, 2009 and $550 million of CCOH senior floating rate notes due
December 15, 2010.
 
On October 8, 2007, Holdco completed an exchange offer, in which $364 million of
CCI’s 5.875% convertible senior notes due 2009, plus accrued interest, were
exchanged for $479 million of CCI’s 6.500% convertible senior notes due 2027.
 
On March 19, 2008, CCO issued $546 million principal amount of 10.875% senior
second-lien notes due 2014, guaranteed by CCOH and certain subsidiaries of CCO,
in a private transaction. The net proceeds from the notes were used to repay,
but not permanently reduce, the outstanding debt balances under the existing
revolving credit facility of CCO.
 
On March 20, 2008, CCO borrowed $500 million principal amount of incremental
term loans (the “Incremental Term Loans”) under the CCO Credit Facility, for net
proceeds of  approximately $471 million. The net proceeds were used for general
corporate purposes.  The Incremental Term Loans have a final maturity of March
6,
 
 
 
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2014 and amortize in quarterly principal installments totaling 1% annually
beginning on June 30, 2008. The Incremental Term Loans bear interest at LIBOR
plus 5%, with a LIBOR floor of 3.5%, and are otherwise governed by and subject
to the existing terms of the CCO credit facilities.
 
On July 2, 2008, CCH II exchanged $338 million aggregate principal amount
of  their 10.250% senior notes due 2010 for $364 million additional CCH II
10.250% senior notes due 2013, plus accrued interest, in a private debt exchange
offer with “qualified institutional buyers,” as defined by Rule 144A of the
Securities Act, exempt from registration under the Act.
 
On October 31, 2008, Holdco completed a tender offer in which a total of
approximately $102 million principal amount of various CCH notes due 2009 and
2010 were exchanged for approximately $99 million of cash.
 
Despite these efforts, the Debtors remained significantly over-leveraged
compared to their peers in the cable industry and faced near term challenges in
sustaining their capital structure, which were exacerbated by the deteriorating
condition in the credit markets.
 
 Recent Events
 
On December 10, 2008, CCI asked its long-standing financial advisor, Lazard LLC
(“Lazard”), to initiate discussions with the Debtors’ bondholders about
financial alternatives to improve the Company’s balance sheet.  The Debtors and
their advisors developed a comprehensive plan of reorganization and encouraged
bondholders to engage in restructuring discussions.  On or about December 15,
2008, an ad hoc committee of unaffiliated holders (the “Crossover Committee”) of
the (i) 11.000% Senior Secured Notes due 2015 of CCH I and CCH I Capital Corp.
and (ii) 10.250% Senior Notes due 2010 and 2013 of CCH II and CCH II Capital
Corp. (the “10.25% Notes”) retained professional advisors.  Beginning in late
December 2008, the Debtors and their advisors engaged in significant discussions
with the Crossover Committee and their advisors regarding the terms of a
consensual restructuring.
 
While these negotiations were underway, CCI determined, in exercising its
fiduciary duties, that it should not make interest payments on certain of its
subsidiaries’ notes (the “Overdue Payment Notes”) for junior entities in its
capital structure, which were due on January 15, 2009 in the amount of
approximately $74 million (the “January Interest Payment”).  Under the
indentures governing the Overdue Payment Notes, after failing to make an
interest payment on such notes, CCI’s subsidiaries that issued the Overdue
Payment Notes had a 30-day grace period in which to make the January Interest
Payment.  If they were unable to do so, an Event of Default under the Overdue
Payment Notes would have occurred on February 13, 2009, giving the trustee under
the indentures and holders of the notes the ability to accelerate the Debtors’
obligations under the notes.  Such acceleration would have allowed the creditors
under certain of the Debtors other debt agreements to accelerate the Debtors’
obligations thereunder.
 
On February 3, 2009, CCO made a request to the administrative agent under the
CCO Credit Facility, to borrow additional revolving loans.  On February 5, 2009,
CCI received a notice from the administrative agent asserting that one or more
Events of Default (as defined in the CCO Credit Facility) have occurred and are
continuing under the CCO Credit Facility, including, pursuant to section 8(g)(v)
thereof.  CCI disagreed with the administrative agent’s assertions and sent a
letter to the administrative agent on February 9, 2009, among other things,
stating that it continued to believe that no Event of Default under the CCO
Credit Facility has occurred or is continuing and requesting the administrative
agent to rescind its notice of default and fund CCO’s borrowing request.  The
administrative agent sent a letter to CCI on February 11, 2009, stating that it
continues to believe that one or more events of default have occurred and are
continuing.   As a result, with the exception of one lender who funded
approximately $354,237, the lenders failed to fund CCO’s borrowing request.
 
After engaging in extensive negotiations, on February 11, 2009, CCI entered into
separate Plan Support Agreements with each of the Committed Parties (the “Plan
Support Agreements”) pursuant to which, among other things, the Committed
Parties agreed to support and vote in favor of a financial restructuring of the
Debtors on terms consistent with the Plan, as described herein.  Pursuant to a
separate Plan Support Agreement, Mr. Allen agreed to support the financial
restructuring of the Debtors on terms consistent with the Plan, including the
compromise and settlement of certain Claims and Interests held by Mr. Allen and
certain of his affiliates as described under “The CII Settlement” beginning on
page 26.  As part of the Plan Support Agreements, on February 13, 2009, CCI paid
the full amount of the January Interest Payment to the Paying Agent for the
Overdue Payment Notes, which constitutes
 
 
 
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payment under the indentures governing those notes.  In addition to the Plan
Support Agreements, CCI entered into commitment letters with each of the
Committed Parties (the “Commitment Letters”) and an Escrow Agreement, dated as
of February 11, 2009, with members of the ad-hoc committee of unaffiliated
holders of the Overdue Payment Notes (“Ad-Hoc Holders”) and Wells Fargo Bank,
National Association, as Escrow Agent (the “Escrow Agreement”).  Under the
Commitment Letters, the Committed Parties agreed to exchange and/or purchase, as
applicable, certain securities of the Debtors under the Plan.  Pursuant to the
Escrow Agreement, the Ad-Hoc Holders deposited into an escrow account the
amounts they received in respect of the January Interest Payment and Wells Fargo
will hold such amounts until (i) CCI and a majority of the Ad-Hoc Holders agree
to the release thereof, (ii) the restructuring transactions contemplated in the
Plan Support Agreements are consummated on or prior to December 15, 2009 or are
not consummated by such date due to a material breach of the Plan Support
Agreements by CCI or its subsidiaries, followed by notice thereof to Wells Fargo
by a majority of the Ad-Hoc Holders and CCI, at which time Wells Fargo will
release such amounts to the Ad-Hoc Holders, or (iii) the transactions
contemplated by the Plan Support Agreements are not consummated by December 15,
2009 for any other reason, followed by notice thereof to Wells Fargo by a
majority of the Ad-Hoc Holders and CCI, at which time it will release such
amounts to CCI or its subsidiaries.  The amounts deposited in escrow were
approximately $47 million.  See “Important Aspects of the Plan” for a further
discussion of the Commitment Letters and the Plan Support Agreements.
 
On March 12, 2009, CCI adopted a Value Creation Plan (the “VCP”), which is
comprised of two components, the Restructuring Value Program (the “RVP”),
which  provides incentives to encourage and reward participants for a successful
restructuring of CCI, and the Cash Incentive Program (the “CIP”), which provides
annual incentives for participants to achieve specified individual performance
goals during each of the three years following CCI’s emergence from
bankruptcy.  Under the RVP, participants earn their RVP payments upon the
earliest of either (i) CCI’s emergence from the Chapter 11 Cases, (ii) when the
Commitment Fees first become payable, (iii) upon the termination of their
employment under certain circumstances or (iv) upon a “change in control,” as
defined in the VCP.  Under the CIP, participants earn their CIP payments upon
their achievement of specified individual performance goals, or if earlier, upon
the termination of their employment under certain circumstances following the
Reorganized Company’s emergence form bankruptcy, or upon a “change in control,”
as defined in the VCP.  Subject to adjustment in accordance with the VCP, the
target RVP awards for CCI’s named executive officers as of March 18, 2009 are:
Neil Smit (President and Chief Executive Officer) - $6 million; Michael Lovett
(Executive Vice President and Chief Operating Officer) - $2.38 million; Eloise
Schmitz (Executive Vice President and Chief Financial Officer ) - $765,000;
Marwan Fawaz (Executive Vice President and Chief Technology Officer) - $765,000;
and Grier Raclin (Executive Vice President, General Counsel and Corporate
Secretary) - $765,000, and their annual target awards under the CIP as of such
date are: Neil Smit - $2.5 million; Michael Lovett - $910,000; Eloise Schmitz -
$664,000; Marwan Fawaz  - $597,000; and Grier Raclin - $597,000.
 
 The Commencement of the Chapter 11 Cases
 
On March 27, 2009, the Debtors filed voluntary petitions in the United States
Bankruptcy Court for the Southern District of New York seeking reorganization
relief under the provisions of Chapter 11 of the Bankruptcy Code to effectuate
the restructuring contemplated by the Plan Support Agreements.
 
The Chapter 11 Cases are being jointly administered under the caption Charter
Communications, Inc., et al., Case No. 09-11435 (JMP).
 
 Events During Bankruptcy
 
 First Day Relief
 
The Debtors entered into bankruptcy after a careful review of their business
operations and cash requirements to minimize the impact of the Chapter 11 Cases
on their day-to-day business operations.  Integral to this transition are
certain “first day” orders the Debtors obtained from the Bankruptcy Court to
provide, among other things, flexibility in cash management, the ability to use
cash collateral and the ability to pay certain Pre-Petition vendors.  To
facilitate, among other things, noticing, Claims processing and voting-related
matters, the Debtors requested that the Bankruptcy Court enter an order granting
certain relief including authorization for the joint administration of the
Debtors’ Chapter 11 Cases.
 
 
 
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Stabilizing Operations
 
On the Petition Date, the Debtors filed several motions seeking orders
authorizing the Debtors to pay various Pre-Petition Claims.  Entry of these
orders eased the strain on the Debtors’ relationships with employees, vendors,
customers and taxing authorities as a consequence of the commencement of the
Chapter 11 Cases.  Among other things, these orders authorized the Debtors to:
(a) honor customer obligations and continue customer programs; (b) maintain cash
management systems; (c) use Pre-Petition bank accounts, checks, and other
business forms; (d) make tax payments to federal, local and state taxing
authorities; (e) prohibit utility companies from discontinuing services; (f) pay
Pre-Petition Claims of shippers, warehousemen and other lien claimants; (g)
maintain Pre-Petition insurance policies and enter into new insurance policies;
(h) maintain Pre-Petition premium financing agreements and enter into new
premium financing agreements; and (i) pay certain Pre-Petition employee wages
and benefits and directors’ fees.  In addition, on the Petition Date, the
Debtors sought authorization to pay certain fixed, liquidated, noncontingent and
undisputed Pre-Petition trade Claims of the Debtors in the ordinary course of
business.  The Debtors also received authorization to enter into a surety bond
program pursuant to which Travelers Casualty and Surety Company of America will
maintain and renew existing, and provide new, surety bonds on a Post-Petition
basis to facilitate the Debtors’ ability to conduct and continue their
operations during and the Chapter 11 Cases.
 
In addition, the Debtors have been funding their operations during the Chapter
11 Cases by using cash on hand and cash flow from operations.  As of March 27,
2009, CCI and its consolidated subsidiaries had approximately $860 million on
their balance sheet in cash on hand and cash equivalents.  Additionally, after
the Petition Date, CCO will no longer have access to the revolving credit
facility and will rely on cash on hand and cash flows from operating activities
to fund projected cash needs.  The Debtors believe their cash on hand and cash
equivalents combined with their cash flows from operating activities will be
sufficient to meet projected cash needs, including the payment of normal
operating costs and expenses, as they proceed with their financial
restructuring.  Therefore, the Debtors have not sought debtor-in-possession
financing.  On the Petition Date, the Debtors filed a motion with the Bankruptcy
Court asking permission to access these funds.
 
On the Petition Date, the Debtors sought authority to use cash collateral of
their secured creditors to permit, among other things, the orderly continuation
of the operation of the Debtors’ businesses and to satisfy their working capital
and operational needs.  The Cash Collateral Order provides adequate protection
to those secured creditors, including:  (a) adequate protection liens; (b) a
section 507(b) superpriority claim; (c) payment of (i) Pre-Petition interest and
fees, as well as current Post-Petition interest at the default rate under the
CCO Credit Facility, (ii) reasonable fees of the administrative agent for the
lenders under the CCO Credit Facility, (iii) reasonable expenses of the members
of the steering committee for the lenders under the CCO Credit Facility,
(iv) all quarterly amortization payments pursuant to the CCO Credit Facility;
(d) certain reporting requirements; and (e) certain financial and other
covenants.
 
The Debtors also requested, on a final basis, authority to provide adequate
protection to holders of second-lien secured notes issued by CCO against any
diminution in value of their interest in certain Pre-Petition collateral on
account of the use of cash collateral and imposition of the automatic stay
pursuant to section 362 of the Bankruptcy Code in the form of, among other
things, adequate protection liens, a 507(b) claim, adequate protection payments
and certain financial and other reporting requirements. The granting of adequate
protection should allow the Debtors to use the secured creditors’ cash
collateral throughout the Chapter 11 Cases.
 
 Preserving Value
 
To preserve the Debtors’ net operating losses (“NOLs”) by ensuring that an
“ownership change” of CCI does not occur prior to the Effective Date, the
Debtors filed a motion seeking an order from the Bankruptcy Court (the “NOL
Order”), which, among other things, requires: (a) certain beneficial owners of
at least 20,000,000 outstanding shares of the Debtors’ equity securities (a
“Substantial Owner”) to notify the Debtors and the Bankruptcy Court that they
are Substantial Owners; (b) Substantial Owners to file a notice with the Debtors
and the Bankruptcy Court before any acquisition or disposition of CCI’s common
stock or options to acquire or dispose of CCI’s common stock; and (c) any other
person or entity to file a notice with the Debtors and the Bankruptcy Court
before any acquisition of  CCI’s common stock, or option to acquire CCI’s common
stock, that would make such person or entity a Substantial Owner.  The NOL Order
allows the Debtors to object in the Bankruptcy Court to any such transactions,
within 15 days of receipt of the filing of the notice of such transactions, if
the transaction is
 
 
 
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reasonably likely to result, prior to the Effective Date, in an ownership change
as defined in the Internal Revenue Code (“IRC”), which ownership change would
limit the Debtors’ ability to utilize their NOLs or other tax attributes.  Any
acquisition or disposition to which the Debtors object would not become
effective unless and until the end of the 10th day after the Bankruptcy Court
enters an order overruling the objection or such objection is withdrawn.  The
NOL Order permits the Debtors to waive in writing, at their sole discretion, any
and all restrictions, stays and notification procedures contained in the NOL
Order.
 
Based on public filings in the first quarter of 2009 and company records, CCI
believes the following persons or entities beneficially own 5% or more of the
outstanding common stock of CCI as of February 28, 2009:
 
Holder of Common Stock
Shares Beneficially Owned
Percent of Class
 
Paul G. Allen
Manning & Napier Advisors, Inc.
 
405.8 million(1)
65.0 million
 
 
52.2%(2)
16.2%
 

       (1)    Assumes exchange of Holdco membership interests and of the CCHC
Note.
       (2)   Represents 91.1% of the voting power of CCI.
 
 Retention of Restructuring and Other Professionals
 
To assist the Debtors in carrying out their duties as debtors in possession and
to represent their interests in the Chapter 11 Cases, the Debtors (other than
CII) intend to retain, as of the Petition Date, and upon authorization from the
Bankruptcy Court, the law firm of Kirkland & Ellis LLP (“K&E”) as their lead
restructuring attorneys.  Additionally, with the Bankruptcy Court’s approval,
the Debtors intend to retain Lazard as financial advisors and investment
bankers.  CII intends to retain, as of the Petition Date, and upon authorization
from the Bankruptcy Court, the law firm of Togut, Segal & Segal LLP as its lead
restructuring attorneys.
 
In addition to these key professionals, the Debtors intend to retain the
following other professionals to assist them in managing the Chapter 11 Cases:
special regulatory and litigation counsel; conflicts counsel; accountants; tax
service providers; corporate communication consultants; and a claims and
noticing agent. The Debtors also employ attorneys and other professionals to
represent or assist them in a variety of situations arising in the ordinary
course of the Debtors’ business in matters unrelated to the Chapter 11
Cases.  The Debtors also intend to retain, with the approval of the Bankruptcy
Court, various experts to assist them in the valuation process.
 
In addition to paying the fees of their own advisors, the Debtors will be
required to pay fees incurred by various other constituencies and their
respective advisors related to the Chapter 11 Cases and the restructuring
transactions provided for in the Plan.
 
Important Aspects of the Plan
 
The section below describes certain important terms of the Plan Support
Agreements, as reflected in the Plan.  Under the Plan Support Agreements, and
subject to, among other conditions, Bankruptcy Court approval of an acceptable
disclosure statement, the Committed Parties and Mr. Allen are required to cast
their votes in favor of the Plan and generally support the Plan.  For the
expected recoveries of each Class, see “Treatment of Claims Against and
Interests in the Debtors.”
 
 Exchange and New CCH II Notes Commitment
 
Under the Plan, each holder of a CCH II Notes Claim will be entitled to exchange
(the “Exchange”) its CCH II Notes for new 13.5% Senior Notes of CCH II and
CCH II Capital Corp. (the “New CCH II Notes”).  Each Holder of an Allowed CCH II
Notes Claim that elects to exchange CCH II Notes for New CCH II Notes pursuant
to the Exchange, and each Rollover Commitment Party, in each case subject to the
Exchange Cutback, shall be entitled to receive (A) New CCH II Notes with a
principal amount equal to the principal amount of the CCH II Notes held by such
Holder or Rollover Commitment Party, (B) New CCH II Notes with a principal
amount equal to the accrued but unpaid interest on such CCH II Notes held by
such Holder or Rollover Commitment Party to the Petition Date, and (C) New CCH
II Notes with a principal amount equal to Post-Petition Interest.  No Holder or
Rollover Commitment Party shall be entitled to receive any amounts for any call
premiums or prepayment penalty with
 
 
 
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respect to the CCH II Notes.  No partial Exchange of CCH II Notes shall be
allowed.  Holders of CCH II Notes who do not elect to participate in the
Exchange will be entitled to receive cash in an amount equal to the outstanding
principal amount of such holders’ CCH II Notes plus accrued but unpaid interest
thereon to the Petition Date plus post petition interest, but excluding any call
premiums or prepayment penalties.  In addition, pursuant to the New CCH II Notes
Commitment, under certain circumstances, certain holders of CCH II Notes have
agreed to purchase up to $267 million in additional New CCH II Notes.  The
aggregate principal amount of New CCH II Notes to be issued pursuant to the Plan
is expected to be approximately $1.5 billion plus accrued but unpaid interest to
the Petition Date plus Post-Petition interest, but excluding any call premiums
or prepayment penalties (collectively, the “Target Amount”), plus an additional
$85 million of New CCH II Notes which will initially be issued to holders of
CCH I Notes Claims and deemed transferred to Mr. Allen or one of his affiliates
on the Effective Date as part of the CII Settlement (as defined below).
 
The Committed Parties have committed to exchange CCH II Notes for an aggregate
of approximately $1.2 billion in principal amount of New CCH II Notes, plus
additional New CCH II Notes in a principal amount equal to accrued but unpaid
interest to the Petition Date plus Post-Petition interest, but excluding any
call premiums or any prepayment penalties.  In the event that the aggregate
principal amount of New CCH II Notes to be issued would exceed the Target
Amount, each holder of CCH II Notes electing to participate in the Exchange,
including the Committed Parties, will receive a pro rata portion of such Target
Amount of New CCH II Notes, based upon the ratio of (i) the aggregate principal
amount of CCH II Notes it has tendered to (ii) the total aggregate principal
amount of CCH II Notes tendered.  Holders of CCH II Notes Claims that
participate in the Exchange will receive a commitment fee for the use of capital
equal to 1.5% of the principal amount plus interest on the CCH II Notes
exchanged by such holder, payable as provided below under “Specified Fees and
Expenses.”
 
Under the New CCH II Notes Commitment, the Committed Parties have committed to
purchase an additional amount of New CCH II Notes in an aggregate principal
amount of $267 million, which amount will be reduced to the extent that the
aggregate principal amount of CCH II Notes exchanged exceeds approximately $1.2
billion (up to approximately $1.5 billion).  Participants in the New CCH II
Commitment will receive a commitment fee for the use of capital equal to the
greater of (i) 3% of their respective portion of the New CCH II Notes Commitment
and (ii) 0.83% of their respective portion of the New CCH II Notes Commitment
for each month beginning April 1, 2009 during which its New CCH II Notes
Commitment remains outstanding, payable as provided below under “Specified Fees
and Expenses.”
 
 The Rights Offering
 
The Debtors intend to raise funds through the issuance of the Rights by the
Reorganized Company that may be exercised for New Class A Stock through the
Rights Offering.
 
Under the Rights Offering, the Reorganized Company will offer to existing
holders of CCH I Notes that are Eligible CCH I Notes Claim Holders the ability
to purchase shares of the New Class A Stock pro rata based on a fraction, the
numerator of which is the principal amount of CCH I Notes Claims held by such
holder and the denominator of which is the principal amount of CCH I Notes
Claims held by all Eligible CCH I Notes Claim Holders (the “Pro Rata
Participation Amount”), to be issued upon the Debtors’ emergence from
bankruptcy, in exchange for a cash payment per share at a 25% discount to the
Plan Value minus the Warrant Value per share of the Reorganized Company upon its
emergence from bankruptcy (the “Per Share Purchase Price”).  The Rights will not
be listed or quoted on any public or over-the-counter exchange or quotation
system and there is no assurance that an active trading market for the Rights
will develop.  However, the Rights will be independently transferable, through
the expiration date of the Rights Offering, but only to accredited investors or
qualified institutional buyers, as such terms are defined in Rule 501 and Rule
144A under the Securities Act, respectively, subject to a right of first refusal
in favor of certain Equity Backstop Parties.  Additional information and
instructions regarding participation in the Rights Offering will be sent
separately to holders of CCH I Notes.  The right of first refusal may discourage
third parties from attempting to purchase any Rights.  As a result, unless
Eligible CCH I Notes Claim Holders exercise their Rights, they may not be able
to realize any value attributable to such Rights.
 
All holders of CCH I Notes Claims as of April 17, 2009 have been sent an
investor certification.  Only Eligible CCH I Notes Claim Holders will be
eligible to participate in the Rights Offering.  All Eligible CCH I Notes Claim
Holders will be mailed the Rights Offering Documents on or about May 12,
2009.  A holder of CCH I Notes
 
 
 
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Claims as of the Rights Offering Record Date that does not return the investor
certification by May 11, 2009 will forfeit any and all rights that it may have
had under the Rights Offering with respect to its CCH I Notes Claim.
 
Each Holder of CCH I Notes Claims that affirmatively represents it is not an
Eligible CCH I Notes Claim Holder on a timely submitted investor certification
shall receive an amount of New Class A Stock equal to the value of the Rights
that such Holder would have been offered if it were an Eligible CCH I Notes
Claim Holder participating in the Rights Offering.  The value of a Right will be
determined (based on the difference between the aggregate equity purchase price
of New Class A Stock embedded in a Right and the value of New Class A Common
Stock at the termination of the Rights Offering (assuming that the Overallotment
Option is exercised in full, subject to subsequent upward adjustment to the
extent not exercised in full) that can be purchased upon exercise of a Right) by
CCI in good faith and in consultation with its financial advisor.  The value
determination will be filed within 10 days of the termination of the Rights
Offering with the Bankruptcy Court (assuming that the Overallotment Option is
exercised in full, subject to subsequent upward adjustment to the extent not
exercised in full), and notice thereof (which shall include the value of each
Right so determined) shall be delivered to each such Holder that timely
certified it is not an Eligible CCH I Notes Claim Holder within five days of
CCI's determination.  Holders receiving notice shall have 10 days following
receipt of such notice to file a challenge to such notice with the Bankruptcy
Court, whose determination of such value shall be binding.
 
The Rights Offering is expected to generate proceeds in an amount equal to
$1.623 billion minus the excess, if any, of $450 million over the aggregate
amount of the CCO Swap Agreement Claims.
 
Pursuant to the Commitment Letters, the Equity Backstop Parties have, severally
and not jointly, agreed to subscribe for their respective pro rata portions of
the Rights Offering.  In addition, pursuant to the Commitment Letters and the
Excess Backstop Agreements, certain of the Equity Backstop Parties have,
severally and not jointly,  agreed to subscribe for any Rights that are not
purchased by Eligible CCH I Notes Claim Holders (other than the Equity Backstop
Parties) in the Rights Offering (the “Excess Backstop”) pro rata based on their
respective portions of the Excess Backstop.  Committed Parties who have
committed to participate in the Excess Backstop will be offered the option to
purchase (the “Overallotment Option”) additional shares of New Class A Stock, at
the Per Share Purchase Price, in an amount equal to $400 million less the
aggregate dollar amount of shares purchased pursuant to the Excess
Backstop.  The Equity Backstop Parties will receive a commitment fee for the use
of capital equal to 3% of their respective Equity Backstop, payable as provided
below under “Specified Fees and Expenses.”  This fee, together with the fees
described above payable to Holders of CCH II Notes Claims that participate in
the Exchange and/or have made commitments pursuant to the New CCH II Notes
Commitment, are referred to herein as the “Commitment Fees.”
 
This Disclosure Statement is not an offer to sell any securities pursuant to the
Rights Offering nor a solicitation of an offer to buy any securities pursuant to
the Rights Offering or otherwise.  An offer and solicitation pursuant to the
Rights Offering will be made only to Eligible CCH I Notes Claim Holders pursuant
to the Rights Offering Documents.
 
 The CII Settlement
 
The Plan provides for a settlement and compromise of the legal, contractual and
equitable rights, Interests, Claims and remedies of Mr. Allen and certain
persons and entities affiliated with Mr. Allen against the Debtors (other than
CII) in exchange for certain consideration described in the Plan (the “CII
Settlement”).
 
Under the CII Settlement, subject to certain exceptions, the CII Settlement
Claim Parties will compromise any Claim or Interest held by a CII Settlement
Claim Party on the Effective Date against or in a Debtor (other than CII). This
includes:
 
·  
28,467,421 shares of Class A Common Stock of CCI (unless disposed of prior to
the Effective Date, subject to the restrictions on transfer in any order of the
Bankruptcy Court);

 
·  
10,000 vested options to acquire shares of Class A Common Stock of CCI;

 
·  
64,356 shares of unvested restricted Class A Common Stock of CCI;

 
·  
50,000 shares of Class B Common Stock of CCI;

 
 
 
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·  
324,300,479 Class A Common Units of Holdco;

 
·  
14,831,552 Class C Common Units of Holdco;

 
·  
rights under the CCI-CII Exchange Agreement;

 
·  
all Interests with respect to 7,282,183 CC VIII Preferred Units;

 
·  
the CCHC Note;

 
·  
accrued and unpaid management fees owing to CII under the Management Agreement;

 
·  
rights under a letter agreement dated as of September 21, 1999 by and among
Vulcan Ventures, Inc. (an entity controlled by Mr. Allen), CCI, CII and Holdco,
which would have granted Vulcan Ventures, Inc. exclusive rights for carriage of
up to eight digital channels of each of the Debtors’ (other than CII) cable
systems;

 
·  
rights under that certain Consulting Agreement, dated as of March 10, 1999 by
and among Vulcan, Inc. (an entity controlled by Mr. Allen), CCI and CCH (the
“Consulting Agreement”), which provides for payment of a fee to Vulcan, Inc. for
assistance with acquisitions by CCI or CCH; and

 
·  
any other Claim or Interest held by a CII Settlement Claim Party, including any
rejection damages Claims, other than Claims and certain Executory Contracts
specifically excluded, as described below.

 
The Plan provides that certain Claims and Interests held by the CII Settlement
Claim Parties will not be compromised under the CII Settlement, including those
under certain Executory Contracts, certain indemnification agreements and
certain notes issued by the Debtors, as more fully described in the Plan.
 
As part of the CII Settlement, in return for their compromise of the rights,
Claims, Interests and remedies described above and in the Plan, and in addition
to any amounts received by virtue of their holding certain note Claims of the
type set forth below under “Treatment of Claims Against and Interests in the
Debtors”:
 
·  
CII’s equity interests in Holdco to the extent of a 1% direct equity interest in
reorganized Holdco will not be cancelled, released or extinguished, and CII will
retain such interest in reorganized Holdco under the Plan and CCI will receive
all remaining equity interests in reorganized Holdco.  CCI’s pre-filing equity
interests in Holdco will not be cancelled, released or extinguished and the
Reorganized Company will hold a 99% direct equity interest in reorganized Holdco
under the Plan.

 
·  
After the Effective Date, Mr. Allen and certain of his affiliates will have the
right to exchange, directly or indirectly, all or a portion of their reorganized
Holdco equity for New Class A Stock as described below under “Reorganized Holdco
Exchange Agreement.”

 
·  
Mr. Allen and/or certain of his affiliates will also receive:

 
o  
shares of New Class B Stock representing, as of the Effective Date, 2% of the
equity value of the Reorganized Company, after giving effect to the Rights
Offering, but prior to the issuance of warrants and equity-based awards provided
for by the Plan, and 35% of the combined voting power of the Reorganized
Company’s capital stock;

 
o  
warrants to purchase shares of New Class A Stock, with a term of 7 years and an
exercise price per share based on a total equity value of the Reorganized
Company equal to the sum of the Plan Value less the Warrant Value plus the gross
proceeds of the Rights Offering, in an aggregate amount equal to 4% of the
equity value of the Reorganized Company, after giving effect to the Rights
Offering, but prior to the issuance of warrants and equity-based awards provided
for by the Plan;

 
o  
$25 million in satisfaction of amounts owing to CII under a management agreement
(the “Allen Management Receivable”), payable as provided below under “Specified
Fees and Expenses”;

 
o  
$150 million in cash;

 
o  
$85 million of New CCH II Notes, which shall be deemed transferred on the
Effective Date from the existing holders of CCH I Notes; and

 
 
 
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o  
cash of up to the amount of $20 million for payment of actual out-of-pocket fees
and expenses in connection with the proposed restructuring, after submission of
documentation by Mr. Allen to the Reorganized Debtors (other than Reorganized
CII) (the “Allen Fee Reimbursement”), payable as provided below under “Specified
Fees and Expenses.”

 
In addition, the preferred membership interests in CC VIII held by CII will be
deemed transferred, automatically and without further action by any party, to
the Reorganized Company.  For the avoidance of doubt, notwithstanding any other
provision of the Plan, CII will not be liable for any payment or distributions
on account of Claims, Interests or amounts to be paid or owing by or other
obligations of any kind of the Debtors (other than CII) under or in connection
with the Plan.
 
The Debtors are seeking to approve the CII Settlement in conjunction with the
Plan pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. The
Debtors intend to present their case in favor of the CII Settlement at the
confirmation hearing and believe the CII Settlement satisfies the standards for
approving settlements in bankruptcy cases. Absent the CII Settlement, among
other things, the Plan would not be feasible because the Debtors would not be
able to reinstate certain debt obligations at CCO and CCOH.
 
The CII Settlement was motivated in part by a desire to ensure that the CII
Settlement Claim Parties caused CII to remain a member of Holdco through the
Effective Date, thereby ensuring that a proportionate amount of the cancellation
of debt income that will be generated by the consummation of the Plan will be
allocated to the CII Settlement Claim Parties.  In turn, this will result in the
retention of a larger portion of the tax attributes (including net operating
losses) that will be available to the Reorganized Company following the
Effective Date.  If the CII Settlement Claim Parties converted their interest in
Holdco into stock of CCI prior to the Effective Date, all of the cancellation of
debt income resulting from the consummation of the Plan would be allocated to
the Reorganized Company, which would result in the Reorganized Company having
significantly less valuable tax attributes available after the Effective Date.
 
The benefit to the Debtors from the CII Settlement is derived not only from the
aforementioned tax benefits and the settlement and compromise of the rights,
Claims, Interests and remedies set forth above and in the Plan, but  also from
the fact that without the Debtors’ negotiation of the terms of the CII
Settlement, the Plan would not exist.  It is only through Mr. Allen’s agreement
with the terms of the CII Settlement that the Debtors are able to avoid the
occurrence of a “Change of Control,” as defined in the CCO Credit Facility.  See
“Summary of Legal Proceedings¾Legal Proceedings in the Bankruptcy
Court¾Challenges to the Plan.”
 
 Lock-Up Agreement
 
Pursuant to the Lock-Up Agreement to be entered into by the Reorganized Company
and Mr. Allen, from and after the Effective Date to but not including the
earliest to occur of (i) September 15, 2014, (ii) the repayment, replacement,
refinancing or substantial modification, including any waiver, to the change of
control provisions of the CCO Credit Facility and (iii) a Change of Control, Mr.
Allen shall not transfer or sell shares of New Class B Stock received by him
under the Plan or convert shares of New Class B Stock received by him under the
Plan into New Class A Stock except to certain affiliates of Mr. Allen (and such
affiliates will also be permitted to transfer such New Class B Stock to Mr.
Allen and other of such affiliates).  For purposes of the Lock-Up Agreement,
“Change of Control” means, directly or indirectly, (i) the sale, transfer,
conveyance or other disposition (other than by way of merger, consolidation or
recapitalization of the Company), in one or a series of related transactions, of
all or substantially all of the assets of the Reorganized Company and its
subsidiaries, taken as a whole, (ii) the consummation of any transaction,
including any merger or consolidation, the result of which is that any “person”
(as such term is used in Section 13(d)(3) of the Exchange Act of 1934, as
amended) other than Mr. Allen or certain of his affiliates, becomes the holder,
directly or indirectly, of 35% or more of the combined voting power of the
capital stock of the Reorganized Company or (iii) the consummation of any
transaction (including without limitation, a merger, consolidation or
recapitalization), pursuant to which any of the outstanding capital stock of the
Reorganized Company is converted into or exchanged for cash, securities or other
property, other than any such transaction where the capital stock of the
Reorganized Company outstanding immediately prior to such transaction (other
than New Class B Stock) is converted into or exchanged for capital stock of the
surviving or transferee person constituting a majority of the outstanding voting
power of such surviving or transferee person immediately after giving effect to
such transaction.
 
 
 
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Reorganized Holdco Exchange Agreement
 
In connection with the Plan, the Reorganized Company, reorganized Holdco,
reorganized CII and Mr. Allen will enter into an exchange agreement (the
“Reorganized Holdco Exchange Agreement”), pursuant to which Mr. Allen and
certain persons and entities affiliated with Mr. Allen (together, the “Allen
Entities”) will have the right, at any time and from time to time on or before
the fifth anniversary of the date of the Reorganized Holdco Exchange Agreement,
to require the Reorganized Company to (i) exchange all or any portion of their
membership units in reorganized Holdco for $1,000 in cash and shares of New
Class A Stock in a taxable transaction, (ii) exchange 100% of the equity in such
Allen Entity for $1,000 in cash and shares of New Class A Stock in a taxable
transaction, or (iii) permit such Allen Entity to merge with and into the
Reorganized Company, or a wholly-owned subsidiary of the Reorganized Company, or
undertake tax-free transactions similar to the taxable transactions in clauses
(i) and (ii), provided that no such tax-free transaction may be elected unless
and until the Allen Entities have utilized 90% of CII’s available ordinary
suspended tax losses under Section 1366(d) of the Internal Revenue Code of 1986,
as amended, against ordinary income.  The number of shares of New Class A Stock
that an Allen Entity receives is subject to certain adjustments, including for
certain distributions received from reorganized Holdco prior to the date the
option to exchange is exercised and for certain distributions made by the
Reorganized Company to holders of its New Common Stock.  In addition, in the
event that a transaction that would constitute a Change of Control is approved
by a majority of the members of the Board of Directors not affiliated with the
person(s) proposing such transactions, the Reorganized Company will have the
right to require (no sooner than at least 120 days following the Effective Date)
the Allen Entities to effect an exchange transaction of the type elected by the
Allen Entities from subclauses (i), (ii) or (iii) above, which election is
subject to certain limitations.
 
 Reorganized Holdco LLC Agreement
 
As part of the Plan, the Reorganized Company, reorganized CII and reorganized
Holdco will enter into an Amended and Restated Limited Liability Company
Agreement of reorganized Holdco (the “Reorganized Holdco LLC Agreement”),
pursuant to which the Reorganized Company will be the manager of reorganized
Holdco and will have the authority, subject to certain limitations, to manage
the business of reorganized Holdco, including to appoint directors to
reorganized Holdco’s board of directors.  As reorganized Holdco’s manager, the
Reorganized Company’s approval will be required for reorganized Holdco to
undertake certain transactions, including, but not limited to, the issuance of
reorganized Holdco membership interests, the sale of all or substantially all of
reorganized Holdco’s assets, the merger of reorganized Holdco with another
entity, making or committing to certain capital expenditures in excess of
reorganized Holdco’s total budget and incurring indebtedness above certain
thresholds.  The approval of 100% of reorganized Holdco membership interests
will be required to undertake certain transactions during the calendar year that
includes the Effective Date, including certain transactions that may potentially
result in taxable gain to reorganized CII, including, but not limited to, the
issuance of reorganized Holdco membership interests, the sale of all or
substantially all of reorganized Holdco’s assets and the merger of reorganized
Holdco with another entity.  The Reorganized Holdco LLC Agreement also provides
that the members intend for reorganized Holdco to be treated as a partnership
for income tax purposes.  As such, all items of tax income, gain, loss and
deduction generated by reorganized Holdco will be allocated to its members in
accordance with the Reorganized Holdco LLC Agreement.
 
 Reinstatement and Unimpairment of Certain Claims
 
The Plan provides that Allowed CCO Credit Facility Claims and Allowed CCOH
Credit Facility Claims will be reinstated and rendered Unimpaired in accordance
with section 1124 of the Bankruptcy Code.  Similarly, the Plan provides that
Allowed CCO Notes Claims and Allowed CCOH Notes Claims will be reinstated and
rendered Unimpaired in accordance with section 1124 of the Bankruptcy Code.
 
Treatment of Executory Contracts
 
The Plan provides that all of the Debtors' Executory Contracts, except certain
exceptions specified in the Plan and the Plan Supplement, shall be deemed
assumed as of the Effective Date.  The Plan also provides that, for each of the
Debtors’ Executory Contracts to be assumed, the Debtors shall designate a
proposed Cure, and any disagreements as to the proposed Cure must be filed on or
before the Cure Bar Date.  The Cure Bar Date shall not apply to any franchise or
Executory Contract with a local franchise authority.
 
 
 
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Employment Agreements
 
Under the Plan, the Employment Agreements of CCI’s Chief Executive Officer (the
“CEO”) and CCI’s Chief Operating Officer (the “COO”) will be deemed assumed by
the Reorganized Company as of the Effective Date. The CEO and COO will receive
cash and bonus compensation and benefits on substantially the same terms as (but
not less economically favorable than) those contained in their respective
employment agreements in effect on the date hereof.  The CEO will receive (i)
long-term incentive compensation having substantially the same value as the
long-term incentive compensation contained in his employment agreement in effect
on the date hereof, and (ii) a waiver with respect to the retention bonus
clawback provision contained in his employment agreement in effect on the date
hereof.
 
The Employment Agreements of the Chief Financial Officer, Chief Restructuring
Officer, General Counsel and Corporate Secretary, Chief Marketing Officer, and
Chief Technology Officer of CCI as of the Petition Date will be deemed assumed
by the Reorganized Company as of the Effective Date, contingent upon amending
such Employment Agreements, to the extent applicable, to:  (i) conform the
definition of “Change in Control” to the corresponding definition in the VCP;
(ii) provide that “Good Reason” will not exist under the Employment Agreements
by virtue of the filing of the Chapter 11 Cases or the implementation of the
Plan; and (iii) include an acknowledgement that, contingent upon the VCP
becoming effective as set forth in the Plan, no awards will be granted in 2009
under the Incentive Plan in place as of the Petition Date.  The Employment
Agreements of the Chief Accounting Officer and certain senior vice presidents of
CCI will be deemed assumed by the Reorganized Company as of the Effective Date,
contingent upon amending such Employment Agreements as set forth in subclauses
(i) and (ii) of this paragraph.
 
Other Agreements
 
The Mutual Services Agreement (subject to certain conditions as set forth in the
Plan) shall be deemed assumed as of the Effective Date.  The Consulting
Agreement will be terminated without any further obligation on the part of the
reorganized CCI or any of its subsidiaries as of the Effective Date and all
claims existing thereunder at termination shall be released and discharged as of
the Effective Date; provided, however, that the Allen Management Receivable
shall be paid in accordance with the CII Settlement under the Plan..
 
 Management Incentive Plan
 
The Plan also provides for a management incentive plan, which will include,
among other things, an allocation of equity-based awards representing no less
than 3% of the fully diluted New Common Stock outstanding on the Effective Date,
after giving effect to the Rights Offering and the issuance of warrants provided
for by the Plan, 50% of which will be distributed as determined by the Board of
Directors no later than one month after  the Effective Date.
 
 Use of Proceeds
 
The Reorganized Company will utilize the proceeds from the sale and issuance of
the New CCH II Notes pursuant to the New CCH II Notes Commitment, the Rights
Offering and the Overallotment Option (if exercised) (the “Net Proceeds”) (a) to
pay the expenses of the Rights Offering; (b) to contribute to reorganized CCH II
an amount sufficient to fund the cash payments due on the CCH II Notes Claims;
(c) to contribute to reorganized CCO to pay the CCO Swap Agreement Claims; (d)
to contribute, as necessary, to reorganized Holdco, reorganized CCHC,
reorganized CCH, reorganized CIH, reorganized CCH I and reorganized CCH II in
consideration for New Value Interests; (e) to pay Administrative Expense Claims
and to make other payments as needed to confirm the Plan and to cause the
Effective Date to occur; and (f) to pay the fees and expenses described below
under “Specified Fees and Expenses” in the manner and order provided
therein.  Subject to certain limitations described below, plus Professional
Fees, the remaining Net Proceeds, if any, will be contributed to reorganized CCO
on or about the Effective Date to fund reorganized CCO’s working capital
requirements following the Effective Date.
 
 Specified Fees and Expenses
 
On the Effective Date, the Allen Management Receivable will be paid in cash to
the extent of Available Cash.  If the Allen Management Receivable is not paid in
full on the Effective Date, then any unpaid portion thereof
 
 
 
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will be paid in cash within 30 days after the end of the first calendar quarter
following the Effective Date to the extent of Available Cash on the last day of
such calendar quarter, and within 20 days after the end of each following
calendar quarter to the extent of Available Cash on the last day of each such
following calendar quarter, until the Allen Management Receivable is paid in
full.
 
On the Effective Date (or when the Overallotment Option is received by the
Reorganized Company), following payment of the Allen Management Receivable in
full, the Commitment Fees, the Allen Fee Reimbursement and the VCP will be paid
in cash to the extent of any remaining Available Cash; provided, however, that
if there is not sufficient Available Cash for payment of the Commitment Fees,
the Allen Fee Reimbursement and the VCP in full on the Effective Date, then
payment of such fees on such date will be reduced pro rata based on the amount
of each such fee in proportion to the total amount of the Commitment Fees, the
Allen Fee Reimbursement and the VCP.  If the Commitment Fees, the Allen Fee
Reimbursement and the VCP are not paid in full on the Effective Date, then any
unpaid portion thereof will be paid in cash within 20 days after the end of the
first calendar quarter following the Effective Date in which the Allen
Management Receivable is paid in full in Cash if there is Available Cash on the
last day of such calendar quarter; provided, however, that, in the discretion of
the Board of Directors, the Allen Fee Reimbursement, the Commitment Fees and the
VCP on a pari passu basis may be paid regardless of sufficient Available
Cash.  For the avoidance of doubt, in no event shall the Commitment Fees (or any
portion thereof), the Allen Fee Reimbursement (or any portion thereof) or the
VCP (or any portion thereof) be paid unless and until the Allen Management
Receivable has been paid in full.  “Available Cash” means, as of any date of
determination, all cash and cash equivalents on the consolidated balance sheet
of the Reorganized Company and its consolidated subsidiaries, excluding any cash
collateral securing letters of credit and segregated cash that may be used only
as required by contract, statute or regulation (other than funds set aside to
satisfy Specified Fees and Expenses), after giving effect to the use of proceeds
described under subparagraphs (a) through (d) of the section entitled “Important
Aspects of the Plan — Use of Proceeds,” minus the Fee Payment Threshold;
provided, that if the Overallotment Option is exercised, the cash proceeds of
the Overallotment Option shall be deemed to be included on the balance sheet of
the Reorganized Company as of the Effective Date, regardless of the actual date
of funding thereof.  “Fee Payment Threshold” means $600 million minus the sum of
(i) any cash payment of interest made during the Chapter 11 Cases on the CCH II
Notes that are exchanged for New CCH II Notes pursuant to the Exchange and (ii)
any prepayment of indebtedness for borrowed money or cash redemption payment for
New Preferred Stock after the Effective Date.
 
If all Specified Fees and Expenses have not been paid in full on the Effective
Date, cash in the full amount of the unpaid portion of the Specified Fees and
Expenses shall be retained by the Reorganized Company pending payment, subject
to the good faith determination of the Reorganized Company to contribute all or
any portion of such retained amount to direct or indirect subsidiaries.  If such
amounts are contributed, alternative arrangements for actual funding by the
Reorganized Company shall be made by the Reorganized Company.
 
 Other Provisions
 
Under the Plan, upon the Debtors’ emergence from bankruptcy, the Reorganized
Company’s initial board of directors will be comprised of 11 members as
described in more detail under “Composition of New Board of Directors After the
Effective Date,” which begins on page 57.  In addition, CCI’s current Chief
Executive Officer and Chief Operating Officer will continue in their same
positions.
 
The Reorganized Company will use its commercially reasonable efforts to file a
shelf registration statement, and to cause such registration statement to become
effective by December 15, 2009, subject to certain exceptions, covering shares
of New Class A Stock, issued or issuable on conversion, exercise or exchange of
securities, held by participants in the Rights Offering, holders of Warrants and
the CII Settlement Claim Parties.  In addition, certain holders of New CCH II
Notes will have their securities registered by the Reorganized Company or in
some circumstances exchanged for registered securities following the Effective
Date.  These registration rights will be subject to certain customary
limitations, including that securities held by holders of less than 1% of the
New Class A Stock shall not be entitled to registration rights.
 
The Plan also provides that for a period of at least 6 months following the
Effective Date, the Reorganized Company, reorganized Holdco, reorganized CCO and
each of their respective direct and indirect subsidiaries will not negotiate,
enter into agreements, understandings or arrangements or consummate transactions
in the aggregate in excess of $500 million in total value to the extent that
such transactions would occur at a price in excess of 110% of
 
 
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either (i) the value implied by the Reorganized Debtors’ valuation analysis set
forth on Exhibit D to this Disclosure Statement (the “Implied Plan Value”) or
(ii) the appraised values, if any such appraised values are obtained as
described in the next paragraph.  Any transactions occurring at a price of 110%
or lower than both the Implied Plan Value and such appraised values (if any)
will not be subject to restriction and will not be taken into account in
determining whether the $500 million limitation has been exceeded.
 
The Plan also provides that within 30 days after the Effective Date, at Mr.
Allen’s request, the Reorganized Company, reorganized Holdco and reorganized CCO
will obtain (at their expense) an independent appraisal of the fair market value
of reorganized Holdco’s and reorganized CCO’s (and their respective
subsidiaries’) tangible and intangible assets as of the Effective Date that will
include a reasonable allocation of value on an asset-by-asset basis, including
any and all below market financing arrangements as may be appropriate.  The
appraisal firm and scope of the appraisal will be reasonably acceptable to Mr.
Allen and the Reorganized Company, reorganized Holdco and reorganized CCO, but
will at all times be retained by and act under the direction of the Reorganized
Company, reorganized Holdco and reorganized CCO, consulting with Mr. Allen.
 
The Amended and Restated Certificate of Incorporation will provide for the
Voting Threshold.  Subject to the Lock-Up Agreement, each share of New Class B
Stock will be convertible into one share of New Class A Stock at the option of
the Holder. In addition, each share of New Class B Stock will be convertible
into one share of New Class A Stock (i) at any time on or after January 1, 2011
and until September 15, 2014, at the election of a majority of the disinterested
members of the Board of Directors, and (ii) at any time on or after September
15, 2014 at the election of a majority of the members of the Board of Directors
(other than members of the Board of Directors elected by the holders of New
Class B Stock).  The Amended and Restated Certificate of Incorporation and the
amended and restated bylaws of the Reorganized Company will also provide for
certain voting rights with respect to the election of the members of the Board
of Directors as described under “Composition of New Board of Directors After the
Effective Date,” which begins on page 57.  In addition, the Amended and Restated
Certificate of Incorporation will include provisions with respect to any
business combination with or into any related party, requiring that such
business combination be approved by the affirmative vote of a majority of the
unrelated members of the Board of Directors and a majority of the disinterested
stockholders.  The Amended and Restated Certificate of Incorporation also
provides that the Board of Directors may impose restrictions on the trading of
the Reorganized Company’s stock if (i) the Reorganized Company has experienced
an “owner shift” as determined for purposes of Section 382 of the IRC of at
least  25 percentage points and (ii) the equity value of the Reorganized Company
has decreased by at least 35% since the Effective Date.  These restrictions,
which are intended to preserve the Reorganized Company’s ability to use its
NOLs, may prohibit any person from acquiring stock of the Reorganized Company if
such person is a “5% shareholder” or would become a “5% shareholder” as a result
of such acquisition.  The restrictions will not operate to prevent any
stockholder from disposing of shares and are subject to certain other exceptions
relating to shares of New Common Stock issued or issuable under the Plan.  The
Board of Director’s ability to impose these restrictions will terminate on the
fifth anniversary of the date of the Reorganized Company’s emergence from
bankruptcy.
 
A comprehensive description of treatment of all Claims and Interests under the
Plan is included below in the section entitled “Treatment of Claims Against and
Interests in the Debtors.”
 
Treatment of Claims Against and
   Interests in the Debtors
 
 Administrative and Priority Claims
 
 Administrative Expense Claims
 
Except with respect to Administrative Expense Claims that are Professional
Compensation and Reimbursement Claims and except to the extent that a Holder of
an Allowed Administrative Expense Claim and the Debtors agree to less favorable
treatment to such Holder, each Holder of an Allowed Administrative Expense Claim
will be paid in full in cash on the later of the Distribution Date under the
Plan and the date such Administrative Expense Claim is Allowed, and the date
such Allowed Administrative Expense Claim becomes due and payable, or as soon
thereafter as is practicable; provided, however, that Allowed Administrative
Expense Claims that arise in the ordinary course of the Debtors’ business will
be paid in full in the ordinary course of business in accordance with
 
 
 
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the terms and subject to the conditions of any agreements governing, instruments
evidencing, or other documents relating to, such transactions.
 
 Professional Compensation and Reimbursement Claims
 
Except as provided in ARTICLE II.A of the Plan, all entities seeking awards by
the Bankruptcy Court of compensation for services rendered or reimbursement of
expenses incurred through and including the Confirmation Date under sections
330, 331, 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code
will (1) File, on or before the date that is ninety (90) days after the
Effective Date their respective applications for final allowances of
compensation for services rendered and reimbursement of expenses incurred and
(2) be paid in full, in cash, in such amounts as are Allowed by the Bankruptcy
Court in accordance with the order relating to or Allowing any such
Administrative Expense Claim.  The Reorganized Debtors are authorized to pay
compensation for Professional services rendered and reimbursement of expenses
incurred after the Confirmation Date in the ordinary course and without the need
for Bankruptcy Court approval.
 
 Priority Tax Claims
 
Each Holder of an Allowed Priority Tax Claim will receive, on the Distribution
Date or such later date as such Allowed Priority Tax Claim becomes due and
payable, at the option of the Debtors, one of the following treatments on
account of such Claim:  (1) cash in an amount equal to the amount of such
Allowed Priority Tax Claim; or (2) such other treatment as may be agreed to by
such Holder and the Debtors or otherwise determined upon an order of the
Bankruptcy Court.
 
 Classification and Treatment of Classified Claims and Interests
 
In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative
Expense Claims, Professional Compensation and Reimbursement Claims and Priority
Tax Claims have not been classified and thus are excluded from the Classes of
Claims and Interests set forth in ARTICLE III of the Plan.
 
The categories of Claims and Interests listed below classify Claims and
Interests for all purposes, including voting, confirmation and distributions
pursuant to the Plan and pursuant to sections 1122 and 1123(a)(1) of the
Bankruptcy Code.  The Plan deems a Claim or Interest to be classified in a
particular Class only to the extent that the Claim or Interest qualifies within
the description of that Class and will be deemed classified in a different Class
to the extent that any remainder of such Claim or Equity Interest qualifies
within the description of such different Class.  A Claim or an Interest is in a
particular Class only to the extent that any such Claim or Interest is Allowed
in that Class and has not been paid or otherwise settled prior to the Effective
Date.  The estimated amounts of Allowed Claims set forth below are as of an
assumed Effective Date of September 30, 2009.
 
Pursuant to the terms of the Plan, except for Claims that are (a) expressly
exempted from the discharge provisions of the Bankruptcy Code, or (b)
specifically identified as being reinstated, all Claims that arose prior to the
confirmation of the Plan will be discharged.
 
A.  
CCI

 
The indenture trustee for the CCI Notes Claims has raised issues with the
Debtors and the Bankruptcy Court regarding the treatment of CCI Notes Claims
under the Plan.  Among other things, the indenture trustee has raised questions
as to: (a) whether certain intercompany claims, upon which the recovery to CCI
Notes Claims under the Plan are based, were compromised in the months and weeks
preceding the Petition Date via preferential transfers, fraudulent conveyances,
or otherwise; (b) the propriety of the CII Settlement; (c) the propriety of
releases granted to parties, including Mr. Allen; (d) whether a theory can be
developed to provide a recovery to CCI Notes based on tax attributes; and (e)
the value, if any, of avoidance actions that would be available to CCI and its
creditors on account of avoidance action recoveries (which avoidance actions are
waived under the Plan).
 
In response, the Debtors first note that intercompany claims, as general
unsecured claims, are treated as paid in full or reinstated under the
Plan.  Moreover, the Debtors contend that the indenture trustee’s allegations
relate primarily, if not exclusively, to the claim that the Plan will fail to
satisfy the requirement that the CCI Notes Claims must recover more under the
Plan than they would in liquidation under Chapter 7 of the Bankruptcy Code.
 
 
 
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The Debtors believe that the Plan satisfies all legal requirements to confirm
the Plan, including that the Plan will provide a higher recovery to the CCI
Notes Claims than a Chapter 7 liquidation.  Absent a settlement of the
allegations made by the indenture trustee or other parties, the Debtors will
present their case in support of confirmation of the Plan at the hearing to
confirm the Plan, the indenture trustee will present its objections and the
Bankruptcy Court will decide the matter.  As evidenced by their filing and
pursuit of the Plan, the Debtors encourage creditors of CCI entitled to vote on
the Plan to cast their vote in favor of the Plan.
 
1. Class A-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class A-1 consists of all Priority Non-Tax Claims
that may exist against CCI.
 
(b)           Impairment and Voting.  Class A-1 is unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCI is not entitled to vote
to accept or reject the Plan and will be deemed conclusively to have accepted
the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCI and the applicable Debtors agree to less
favorable treatment to such Holder, each Holder of such Allowed Priority Non-Tax
Claim will be paid in full in cash, plus Post-Petition Interest, on the later of
the Distribution Date, the date such Priority Non-Tax Claim is Allowed and the
date such Allowed Priority Non-Tax Claim becomes due and payable, or as soon
thereafter as is practicable; provided, however, that Priority Non-Tax Claims
that arise in the ordinary course of the Debtors’ business and which are not due
and payable on or before the Effective Date will be paid in the ordinary course
of business in accordance with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class A-2:  Secured Claims
 
(a)           Classification.  Class A-2 consists of all Secured Claims that may
exist against CCI.
 
(b)           Impairment and Voting.  Class A-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCI is not entitled to vote to accept
or reject the Plan and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCI and the applicable Debtors agree to less favorable
treatment to such Holder, at the sole option of the Debtors, (i) each Allowed
Secured Claim against CCI will be reinstated and rendered Unimpaired in
accordance with section 1124 of the Bankruptcy Code, (ii) each Holder of an
Allowed Secured Claim against CCI will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date and the date such
Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as is
practicable, or (iii) each Holder of an Allowed Secured Claim against CCI will
receive the collateral securing its Allowed Secured Claim, plus Post-Petition
Interest, on the later of the Distribution Date and the date such Secured Claim
becomes an Allowed Secured Claim, or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class A-3:  General Unsecured Claims
 
(a)           Classification.  Class A-3 consists of all General Unsecured
Claims that may exist against CCI other than all General Unsecured Claims
against CCI held by any CII Settlement Claim Party.
 
(b)           Impairment and Voting.  Class A-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCI is entitled to vote to
accept or reject the Plan.
 
 
 
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(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCI and the applicable Debtors agree to less
favorable treatment to such Holder, at the sole option of the Debtors, (i) each
Allowed General Unsecured Claim against CCI will be reinstated and rendered
Unimpaired in accordance with section 1124 of the Bankruptcy Code, or (ii) each
Holder of an Allowed General Unsecured Claim against CCI will be paid in full in
cash on the Distribution Date or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $1,019,317
 
(e)           Projected Percentage Recovery:  100%
 
4. Class A-4:  CCI Notes Claims
 
The recoveries set forth below for holders of Claims against CCI are in part on
account of intercompany claims against CCO and include liabilities payable to
third parties, cash and intercompany loans and airplane capital lease
obligations.  The indenture trustee for the CCI Notes Claims has raised issues
with the Debtors and the Bankruptcy Court regarding the treatment of CCI Notes
Claims under the Plan.  Among other things, the indenture trustee has raised
questions as to: (a) whether certain intercompany claims, upon which the
recovery to CCI Notes Claims under the Plan are based, were compromised in the
months and weeks preceding the Petition Date via preferential transfers,
fraudulent conveyances, or otherwise; (b) the reasonableness of the CII
Settlement; (c) the propriety of releases granted to parties, including Mr.
Allen; (d) whether the tax attributes of CCI should increase the recovery to the
holders of the CCI Notes; and (e) the existence, if any, of plausible avoidance
actions that would be available to CCI and its creditors on account of avoidance
action recoveries (which avoidance actions are waived under the Plan).
 
In response, the Debtors first note that intercompany claims, as general
unsecured claims, are treated as paid in full or reinstated under the
Plan.  Moreover, the Debtors contend that the indenture trustee’s allegations
relate primarily, if not exclusively, to the claim that the Plan will fail to
satisfy the requirement to confirm that the CCI Notes Claims must recover more
under the Plan than they would in liquidation under Chapter 7 of the Bankruptcy
Code.  The Debtors believe that the Plan satisfies all legal requirements to
confirm the Plan, including that the Plan will provide a higher recovery to the
CCI Notes Claims than a Chapter 7 liquidation.  Absent a settlement of the
allegations made by the indenture trustee or other parties, the Debtors will
present their case in support of confirmation of the Plan at the hearing to
confirm the Plan, the indenture trustee will present its objections and the
Bankruptcy Court will decide the matter.  As evidenced by their filing and
pursuit of the Plan, the Debtors encourage creditors of CCI entitled to vote on
the Plan to cast their vote in favor of the Plan.
 
(a)           Classification.  Class A-4 consists of all CCI Notes Claims.
 
(b)           Impairment and Voting.  Class A-4 is Impaired by the Plan.  Each
Holder of an Allowed CCI Notes Claim is entitled to vote to accept or reject the
Plan.
 
(c)           Distributions.  The CCI Notes Claims shall be deemed Allowed in
the aggregate amount of $497,489,463.  On the Distribution Date, each Holder of
an Allowed CCI Notes Claim shall receive its Pro Rata share of (i) New Preferred
Stock and (ii) Cash in an aggregate amount equal to $24,549,331.
 
(d)           Estimated Allowed Amount of Claims:  $497,489,463
 
(e)           Projected Percentage Recovery:  19.4%
 
5. Class A-5:  Section 510(b) Claims
 
(a)           Classification.  Class A-5 consists of all Section 510(b) Claims
that may exist against CCI other than all Section 510(b) Claims against CCI held
by any CII Settlement Claim Party.
 
(b)           Impairment and Voting.  Class A-5 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against CCI is not entitled to vote to accept
or reject the Plan and will be deemed conclusively to have rejected the Plan.
 
 
 
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(c)           Distributions.  Section 510(b) Claims will be cancelled, released,
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery: 0%
 
6. Class A-6:  Interests
 
(a)           Classification.  Class A-6 consists of all Interests in CCI other
than all Interests in CCI held by any CII Settlement Claim Party.
 
(b)           Impairment and Voting.  Class A-6 is Impaired by the Plan.  Each
Holder of an Interest in CCI is not entitled to vote to accept or reject the
Plan and will be deemed conclusively to have rejected the Plan.
 
(c)           Distributions.  Interests in CCI, whether represented by stock,
preferred share purchase rights or otherwise, will be cancelled, released, and
extinguished and the Holders of such Interests will receive no distribution
under the Plan on account thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery: 0%
 
B. CII
 
1. Class B-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class B-1 consists of all Priority Non-Tax Claims
that may exist against CII.
 
(b)           Impairment and Voting.  Class B-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CII is not entitled to vote
to accept or reject the Plan and shall be deemed conclusively to have accepted
the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CII and the applicable Debtors agree to less
favorable treatment to such Holder, each Holder of such Allowed Priority Non-Tax
Claim shall be paid in full in cash, plus Post-Petition Interest, on the later
of the Distribution Date under the Plan, the date such Priority Non-Tax Claim is
Allowed, and the date such Allowed Priority Non-Tax Claim becomes due and
payable, or as soon thereafter as is practicable; provided, however, that
Priority Non-Tax Claims that arise in the ordinary course of business and which
are not due and payable on or before the Effective Date shall be paid in the
ordinary course of business in accordance with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class B-2:  Secured Claims
 
(a)           Classification.  Class B-2 consists of all Secured Claims that may
exist against CII.
 
(b)           Impairment and Voting.  Class B-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CII is not entitled to vote to accept
or reject the Plan and shall be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CII and the applicable Debtors agree to less favorable
treatment to such Holder, at the sole option of CII, (i) each Allowed Secured
Claim against CII shall be reinstated and rendered Unimpaired in accordance with
section 1124 of the Bankruptcy Code, (ii) each Holder of an Allowed Secured
Claim against CII shall be paid in full in cash, plus
 
 
 
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Post-Petition Interest, on the later of the Distribution Date under the Plan and
the date such Secured Claim becomes an Allowed Secured Claim, or as soon
thereafter as is practicable, or (iii) each Holder of an Allowed Secured Claim
against CII shall receive the collateral securing its Allowed Secured Claim,
plus Post-Petition Interest, on the later of the Distribution Date under the
Plan and the date such Secured Claim becomes an Allowed Secured Claim, or as
soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class B-3:  General Unsecured Claims
 
(a)           Classification.  Class B-3 consists of all General Unsecured
Claims that may exist against CII.
 
(b)           Impairment and Voting.  Class B-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CII is entitled to vote to
accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CII and the applicable Debtors agree to less
favorable treatment to such Holder, at the sole option of the applicable
Debtors, (i) each Allowed General Unsecured Claim against CII shall be
reinstated and rendered Unimpaired in accordance with section 1124 of the
Bankruptcy Code or (ii) each Holder of an Allowed General Unsecured Claim
against CII shall be paid in full in Cash on the Distribution Date or as soon
thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $ 5,900,000
 
(e)           Projected Percentage Recovery:  100%
 
4.           Class B-4:  CII Shareholder Claims
 
(a)           Classification.  Class B-4 consists of CII Shareholder Claims.
 
(b)           Impairment and Voting.  Class B-4 is Impaired by the Plan.  The
Holder of an Allowed CII Shareholder Claim is entitled to vote to accept or
reject the Plan.
 
(c)           Distributions.  The Holder of Allowed CII Shareholder Claims shall
receive 100,000 newly issued shares of Class A Voting Common Stock of
Reorganized CII on the Effective Date.
 
C.  
Holdco, Enstar Communications Corporation, and Charter Gateway, LLC

 
1. Class C-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class C-1 consists of all Priority Non-Tax Claims
that may exist against Holdco, Enstar Communications Corporation, and Charter
Gateway, LLC.
 
(b)           Impairment and Voting.  Class C-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against Holdco, Enstar
Communications Corporation, and Charter Gateway, LLC is not entitled to vote to
accept or reject the Plan and will be deemed conclusively to have accepted the
Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC and the applicable Debtors agree to less favorable
treatment to such Holder, each Holder of such Allowed Priority Non-Tax Claim
will be paid in full in cash, plus Post-Petition Interest, on the later of the
Distribution Date, the date such Priority Non-Tax Claim is Allowed and the date
such Allowed Priority Non-Tax Claim becomes due and payable, or as soon
thereafter as is practicable; provided, however, that Priority Non-Tax Claims
that arise in the ordinary course of the Debtors’ business and which are not due
and payable on or before the Effective Date will be paid in the ordinary course
of business in accordance with the terms thereof.
 
 
 
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(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class C-2:  Secured Claims
 
(a)           Classification.  Class C-2 consists of all Secured Claims that may
exist against Holdco, Enstar Communications Corporation, and Charter Gateway,
LLC.
 
(b)           Impairment and Voting.  Class C-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against Holdco, Enstar Communications
Corporation, and Charter Gateway, LLC is not entitled to vote to accept or
reject the Plan and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against Holdco, Enstar Communications Corporation, and Charter
Gateway, LLC and the applicable Debtors agree to less favorable treatment to
such Holder, at the sole option of the Debtors, (i) each Allowed Secured Claim
against Holdco, Enstar Communications Corporation, and Charter Gateway, LLC will
be reinstated and rendered Unimpaired in accordance with section 1124 of the
Bankruptcy Code, (ii) each Holder of an Allowed Secured Claim against Holdco,
Enstar Communications Corporation, and Charter Gateway, LLC will be paid in full
in cash, plus Post-Petition Interest, on the later of the Distribution Date and
the date such Secured Claim becomes an Allowed Secured Claim, or as soon
thereafter as is practicable, or (iii) each Holder of an Allowed Secured Claim
against Holdco, Enstar Communications Corporation, and Charter Gateway, LLC will
receive the collateral securing its Allowed Secured Claim, plus Post-Petition
Interest, on the later of the Distribution Date and the date such Secured Claim
becomes an Allowed Secured Claim, or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class C-3:  General Unsecured Claims
 
(a)           Classification.  Class C-3 consists of all General Unsecured
Claims that may exist against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC.
 
(b)           Impairment and Voting.  Class C-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against Holdco, Enstar
Communications Corporation, and Charter Gateway, LLC is entitled to vote to
accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC and the applicable Debtors agree to less favorable
treatment to such Holder, at the sole option of the Debtors, (i) each Allowed
General Unsecured Claim against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC will be reinstated and rendered Unimpaired in accordance
with section 1124 of the Bankruptcy Code, or (ii) each Holder of an Allowed
General Unsecured Claim against Holdco, Enstar Communications Corporation, and
Charter Gateway, LLC will be paid in full in cash on the Distribution Date or as
soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
4. Class C-4:  Holdco Notes Claims
 
(a)           Classification.  Class C-4 consists of Holdco Notes Claims.
 
(b)           Impairment and Voting.  Class C-4 is Impaired by the Plan.  Each
Holder of an Allowed Holdco Notes Claim is not entitled to vote to accept or
reject the Plan and will be deemed conclusively to have accepted the Plan.
 
 
 
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(c)           Distributions.  The Holdco Notes Claims shall be Allowed in the
aggregate amount of $497,489,463.  The aggregate amount distributed under the
Plan on account of Class C-4 Allowed Holdco Notes Claims shall be consideration
equal to $19,549,331, which consideration shall be distributed as set forth in
Class A-4 as CCI is the sole Holder of Holdco Notes Claims.
 
(d)           Estimated Allowed Amount of Claims:  $497,489,463
 
(e)           Projected Percentage Recovery:  3.9%
 
5. Class C-5:  Section 510(b) Claims
 
(a)           Classification.  Class C-5 consists of all Section 510(b) Claims
that may exist against Holdco, Enstar Communications Corporation, and Charter
Gateway, LLC.
 
(b)           Impairment and Voting.  Class C-5 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against Holdco, Enstar Communications
Corporation, and Charter Gateway, LLC is not entitled to vote to accept or
reject the Plan and will be deemed conclusively to have rejected the Plan.
 
(c)           Distributions.  Section 510(b) Claims will be cancelled, released,
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
6. Class C-6:  Interests
 
(a)           Classification.  Class C-6 consists of all Interests in Holdco,
Enstar Communications Corporation, and Charter Gateway, LLC other than all
Interests in Holdco held by any CII Settlement Claim Party.
 
(b)           Impairment and Voting.  Class C-6 is Impaired by the Plan.  Each
Holder of an Allowed Interest against Holdco, Enstar Communications Corporation,
and Charter Gateway, LLC is not entitled to vote to accept or reject the Plan
and shall be deemed conclusively to have rejected the Plan.
 
(c)           Distributions.  Interests in Holdco, Enstar Communications
Corporation, and Charter Gateway, LLC will remain in place in exchange for New
Value Consideration in the amount of $2 million to be contributed by CCI from
the Rights Offering.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
D. CCHC
 
1. Class D-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class D-1 consists of all Priority Non-Tax Claims
that may exist against CCHC.
 
(b)           Impairment and Voting.  Class D-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCHC is not entitled to vote
to accept or reject the Plan and will be deemed conclusively to have accepted
the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCHC and the applicable Debtors agree to less
favorable treatment to such Holder, each Holder of such Allowed Priority Non-Tax
Claim will be paid in full in cash, plus Post-Petition Interest, on the later of
the Distribution Date, the date such Priority Non-Tax Claim is Allowed and the
date such Allowed Priority Non-Tax Claim becomes due and payable, or as soon
thereafter as is practicable; provided, however, that Priority Non-Tax
 
 
 
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Claims that arise in the ordinary course of the Debtors’ business and which are
not due and payable on or before the Effective Date will be paid in the ordinary
course of business in accordance with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class D-2:  Secured Claims
 
(a)           Classification.  Class D-2 consists of all Secured Claims that may
exist against CCHC.
 
(b)           Impairment and Voting.  Class D-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCHC is not entitled to vote to
accept or reject the Plan and will be deemed conclusively to have accepted the
Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCHC and the applicable Debtors agree to less favorable
treatment to such Holder, at the sole option of the Debtors, (i) each Allowed
Secured Claim against CCHC will be reinstated and rendered Unimpaired in
accordance with section 1124 of the Bankruptcy Code, (ii) each Holder of an
Allowed Secured Claim against CCHC will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date and the date such
Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as is
practicable, or (iii) each Holder of an Allowed Secured Claim against CCHC will
receive the collateral securing its Allowed Secured Claim, plus Post-Petition
Interest, on the later of the Distribution Date and the date such Secured Claim
becomes an Allowed Secured Claim, or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class D-3:  General Unsecured Claims
 
(a)           Classification.  Class D-3 consists of all General Unsecured
Claims that may exist against CCHC other than all General Unsecured Claims
against CCHC held by any CII Settlement Claim Party.
 
(b)           Impairment and Voting.  Class D-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCHC is entitled to vote to
accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCHC and the applicable Debtors agree to less
favorable treatment to such Holder, at the sole option of the Debtors, (i) each
Allowed General Unsecured Claim against CCHC will be reinstated and rendered
Unimpaired in accordance with section 1124 of the Bankruptcy Code, or (ii) each
Holder of an Allowed General Unsecured Claim against CCHC will be paid in full
in cash on the Distribution Date or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
4. Class D-4:  Section 510(b) Claims
 
(a)           Classification.  Class D-4 consists of all Section 510(b) Claims
that may exist against CCHC.
 
(b)           Impairment and Voting.  Class D-4 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against CCHC is not entitled to vote to accept
or reject the Plan and will be deemed conclusively to have rejected the Plan.
 
 
 
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(c)           Distributions.  Section 510(b) Claims will be cancelled, released
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
5. Class D-5:  Interests
 
(a)           Classification.  Class D-5 consists of all Interests in CCHC.
 
(b)           Impairment and Voting.  Class D-5 is Impaired by the Plan.  Each
Holder of an Allowed Interest against CCHC is not entitled to vote to accept or
reject the Plan and shall be deemed conclusively to have rejected the Plan.
 
(c)           Distributions.  Interests in CCHC will remain in place in exchange
for New Value Consideration in the amount of $2 million to be contributed by CCI
from the Rights Offering.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
E. CCH and Charter Communications Holdings Capital Corp.
 
1. Class E-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class E-1 consists of all Priority Non-Tax Claims
that may exist against CCH and Charter Communications Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class E-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCH and Charter
Communications Holdings Capital Corp. is not entitled to vote to accept or
reject the Plan and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCH and Charter Communications Holdings Capital
Corp. and the applicable Debtors agree to less favorable treatment to such
Holder, each Holder of such Allowed Priority Non-Tax Claim will be paid in full
in cash, plus Post-Petition Interest, on the later of the Distribution Date, the
date such Priority Non-Tax Claim is Allowed and the date such Allowed Priority
Non-Tax Claim becomes due and payable, or as soon thereafter as is practicable;
provided, however, that Priority Non-Tax Claims that arise in the ordinary
course of the Debtors’ business and which are not due and payable on or before
the Effective Date will be paid in the ordinary course of business in accordance
with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class E-2:  Secured Claims
 
(a)           Classification.  Class E-2 consists of all Secured Claims that may
exist against CCH and Charter Communications Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class E-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCH and Charter Communications
Holdings Capital Corp. is not entitled to vote to accept or reject the Plan and
will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCH and Charter Communications Holdings Capital Corp. and
the applicable Debtors agree to less favorable treatment to such Holder, at the
sole option of the Debtors, (i) each Allowed Secured Claim against CCH and
 
 
 
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Charter Communications Holdings Capital Corp. will be reinstated and rendered
Unimpaired in accordance with section 1124 of the Bankruptcy Code, (ii) each
Holder of an Allowed Secured Claim against CCH and Charter Communications
Holdings Capital Corp. will be paid in full in cash, plus Post-Petition
Interest, on the later of the Distribution Date and the date such Secured Claim
becomes an Allowed Secured Claim, or as soon thereafter as is practicable, or
(iii) each Holder of an Allowed Secured Claim against CCH and Charter
Communications Holdings Capital Corp. will receive the collateral securing its
Allowed Secured Claim, plus Post-Petition Interest, on the later of the
Distribution Date and the date such Secured Claim becomes an Allowed Secured
Claim, or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class E-3:  General Unsecured Claims
 
(a)           Classification.  Class E-3 consists of all General Unsecured
Claims that may exist against CCH and Charter Communications Holdings Capital
Corp.
 
(b)           Impairment and Voting.  Class E-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCH and Charter
Communications Holdings Capital Corp. is entitled to vote to accept or reject
the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCH and Charter Communications Holdings Capital
Corp. and the applicable Debtors agree to less favorable treatment to such
Holder, at the sole option of the Debtors, (i) each Allowed General Unsecured
Claim against CCH and Charter Communications Holdings Capital Corp. will be
reinstated and rendered Unimpaired in accordance with section 1124 of the
Bankruptcy Code, or (ii) each Holder of an Allowed General Unsecured Claim
against CCH and Charter Communications Holdings Capital Corp. will be paid in
full in cash on the Distribution Date or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
4. Class E-4:  CCH Notes Claims
 
(a)           Classification.  Class E-4 consists of CCH Notes Claims.
 
(b)           Impairment and Voting.  Class E-4 is Impaired by the Plan.  Each
Holder of an Allowed CCH Notes Claim is entitled to vote to accept or reject the
Plan.
 
(c)           Distributions.  CCH Notes Claims shall be Allowed in the aggregate
amount of $599,379,759.  On the Distribution Date, each Holder of an Allowed CCH
Notes Claim shall receive its Pro Rata share of the CCH Warrants.
 
(d)           Estimated Allowed Amount of Claims:  $599,379,759
 
(e)           Projected Percentage Recovery:  0.4%
 
5. Class E-5:  Section 510(b) Claims
 
(a)           Classification.  Class E-5 consists of all Section 510(b) Claims
that may exist against CCH and Charter Communications Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class E-5 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against CCH and Charter Communications Holdings
Capital Corp. is not entitled to vote to accept or reject the Plan and will be
deemed conclusively to have rejected the Plan.
 
 
 
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(c)           Distributions.  Section 510(b) Claims will be cancelled, released,
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
6. Class E-6:  Interests
 
(a)           Classification.  Class E-6 consists of all Interests in CCH and
Charter Communications Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class E-6 is Impaired by the Plan.  Each
Holder of an Allowed Interest against CCH and Charter Communications Holdings
Capital Corp. is not entitled to vote to accept or reject the Plan and shall be
deemed conclusively to have rejected the Plan.
 
(c)           Distributions.  Interests in CCH and Charter Communications
Holdings Capital Corp. will remain in place in exchange for New Value
Consideration in the amount of $1,533,180 to be contributed by CCI from the
Rights Offering.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
F.  
CIH and CCH I Holdings Capital Corp.

 
1. Class F-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class F-1 consists of all Priority Non-Tax Claims
that may exist against CIH and CCH I Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class F-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CIH and CCH I Holdings
Capital Corp. is not entitled to vote to accept or reject the Plan and will be
deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CIH and CCH I Holdings Capital Corp. and the
applicable Debtors agree to less favorable treatment to such Holder, each Holder
of such Allowed Priority Non-Tax Claim will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date, the date such
Priority Non-Tax Claim is Allowed and the date such Allowed Priority Non-Tax
Claim becomes due and payable, or as soon thereafter as is practicable;
provided, however, that Priority Non-Tax Claims that arise in the ordinary
course of the Debtors’ business and which are not due and payable on or before
the Effective Date will be paid in the ordinary course of business in accordance
with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class F-2:  Secured Claims
 
(a)           Classification.  Class F-2 consists of all Secured Claims that may
exist against CIH and CCH I Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class F-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CIH and CCH I Holdings Capital Corp.
is not entitled to vote to accept or reject the Plan and will be deemed
conclusively to have accepted the Plan.
 
 
 
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(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CIH and CCH I Holdings Capital Corp. and the applicable
Debtors agree to less favorable treatment to such Holder, at the sole option of
the Debtors, (i) each Allowed Secured Claim against CIH and CCH I Holdings
Capital Corp. will be reinstated and rendered Unimpaired in accordance with
section 1124 of the Bankruptcy Code, (ii) each Holder of an Allowed Secured
Claim against CIH and CCH I Holdings Capital Corp. will be paid in full in cash,
plus Post-Petition Interest, on the later of the Distribution Date and the date
such Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as is
practicable, or (iii) each Holder of an Allowed Secured Claim against CIH and
CCH I Holdings Capital Corp. will receive the collateral securing its Allowed
Secured Claim, plus Post-Petition Interest, on the later of the Distribution
Date and the date such Secured Claim becomes an Allowed Secured Claim, or as
soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class F-3:  General Unsecured Claims
 
(a)           Classification.  Class F-3 consists of all General Unsecured
Claims that may exist against CIH and CCH I Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class F-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CIH and CCH I Holdings
Capital Corp. is entitled to vote to accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CIH and CCH I Holdings Capital Corp. and the
applicable Debtors agree to less favorable treatment to such Holder, at the sole
option of the Debtors, (i) each Allowed General Unsecured Claim against CIH and
CCH I Holdings Capital Corp. will be reinstated and rendered Unimpaired in
accordance with section 1124 of the Bankruptcy Code, or (ii) each Holder of an
Allowed General Unsecured Claim against CIH and CCH I Holdings Capital Corp.
will be paid in full in cash on the Distribution Date or as soon thereafter as
is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
4. Class F-4:  CIH Notes Claims
 
(a)           Classification.  Class F-4 consists of CIH Notes Claims.
 
(b)           Impairment and Voting.  Class F-4 is Impaired by the Plan.  Each
Holder of an Allowed CIH Notes Claim is entitled to vote to accept or reject the
Plan.
 
(c)           Distributions.  CIH Notes Claims will be Allowed in the aggregate
amount of $2,625,060,226.  On the Distribution Date, each Holder of CIH Notes
Claim will receive its Pro Rata share of the CIH Warrants.
 
(d)           Estimated Allowed Amount of Claims:  $2,625,060,226
 
(e)           Projected Percentage Recovery:  0.5%
 
5. Class F-5:  Section 510(b) Claims
 
(a)           Classification.  Class F-5 consists of all Section 510(b) Claims
that may exist against CIH and CCH I Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class F-5 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against CIH and CCH I Holdings Capital Corp. is
not entitled to vote to accept or reject the Plan and will be deemed
conclusively to have rejected the Plan.
 
 
 
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(c)           Distributions.  Section 510(b) Claims will be cancelled, released,
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
6. Class F-6:  Interests
 
(a)           Classification.  Class F-6 consists of all Interests in CIH and
CCH I Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class F-6 is Impaired by the Plan.  Each
Holder of an Allowed Interest against CIH and CCH I Holdings Capital Corp. is
not entitled to vote to accept or reject the Plan and shall be deemed
conclusively to have rejected the Plan.
 
(c)           Distributions.  Interests in CIH and CCH I Holdings Capital Corp.
will remain in place in exchange for New Value Consideration in the amount of
$8,932,440 to be contributed by CCI from the Rights Offering.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
G. CCH I and CCH I Capital Corp.
 
1. Class G-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class G-1 consists of all Priority Non-Tax Claims
that may exist against CCH I and CCH I Capital Corp.
 
(b)           Impairment and Voting.  Class G-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCH I and CCH I Capital
Corp. is not entitled to vote to accept or reject the Plan and will be deemed
conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCH I and CCH I Capital Corp. and the applicable
Debtors agree to less favorable treatment to such Holder, each Holder of such
Allowed Priority Non-Tax Claim will be paid in full in cash, plus Post-Petition
Interest, on the later of the Distribution Date, the date such Priority Non-Tax
Claim is Allowed and the date such Allowed Priority Non-Tax Claim becomes due
and payable, or as soon thereafter as is practicable; provided, however, that
Priority Non-Tax Claims that arise in the ordinary course of the Debtors’
business and which are not due and payable on or before the Effective Date will
be paid in the ordinary course of business in accordance with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class G-2:  Secured Claims
 
(a)           Classification.  Class G-2 consists of all Secured Claims that may
exist against CCH I and CCH I Capital Corp. (but excluding any Secured Claim
that is also a CCH I Notes Claim).
 
(b)           Impairment and Voting.  Class G-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCH I and CCH I Capital Corp. is not
entitled to vote to accept or reject the Plan and will be deemed conclusively to
have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCH I and CCH I Capital Corp. and the applicable Debtors
agree to less favorable treatment to such Holder, at the
 
 
 
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sole option of the Debtors, (i) each Allowed Secured Claim against CCH I and
CCH I Capital Corp. will be reinstated and rendered Unimpaired in accordance
with section 1124 of the Bankruptcy Code, (ii) each Holder of an Allowed Secured
Claim against CCH I and CCH I Capital Corp. will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date and the date such
Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as is
practicable or (iii) each Holder of an Allowed Secured Claim against CCH I and
CCH I Capital Corp. will receive the collateral securing its Allowed Secured
Claim, plus Post-Petition Interest, on the later of the Distribution Date and
the date such Secured Claim becomes an Allowed Secured Claim, or as soon
thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class G-3:  General Unsecured Claims
 
(a)           Classification.  Class G-3 consists of all General Unsecured
Claims that may exist against CCH I and CCH I Capital Corp.
 
(b)           Impairment and Voting.  Class G-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCH I and CCH I Capital
Corp. is entitled to vote to accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCH I and CCH I Capital Corp. and the applicable
Debtors agree to less favorable treatment to such Holder, at the sole option of
the Debtors, (i) each Allowed General Unsecured Claim against CCH I and CCH I
Capital Corp. will be reinstated and rendered Unimpaired in accordance with
section 1124 of the Bankruptcy Code, or (ii) each Holder of an Allowed General
Unsecured Claim against CCH I and CCH I Capital Corp. will be paid in full in
cash on the Distribution Date or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
4. Class G-4:  CCH I Notes Claims
 
(a)           Classification.  Class G-4 consists of CCH I Notes Claims.
 
(b)           Impairment and Voting.  Class G-4 is Impaired by the Plan.  Each
Holder of an Allowed CCH I Notes Claim is entitled to vote to accept or reject
the Plan.
 
(c)           Distributions.
 
(i)           The CCH I Notes Claims shall be Allowed in the aggregate amount of
$4,170,040,378.  On the Distribution Date, each Holder of a CCH I Notes Claim
shall receive its Pro Rata share of New Class A Stock in an aggregate amount to
all such Holders equal to 100% of the New Class A Stock outstanding as of the
Effective Date, prior to giving effect to the Rights Offering, the issuance of
Warrants and any other distributions of New Class A Stock contemplated by the
Plan, which New Class A Stock (prior to such effects) shall be deemed to have an
aggregate value equal to the Plan Value minus the Warrant Value minus 3% of the
equity value of the Reorganized Company, after giving effect to the Rights
Offering, but prior to the issuance of Warrants and equity-based awards provided
for by the Plan.
 
Each Eligible CCH I Notes Claim Holder shall also receive Rights pursuant to the
Rights Offering, as set forth below.
 
(ii)           Rights Offering. Each Eligible CCH I Notes Claim Holder shall be
offered pursuant to the Rights Offering Documents the right to purchase shares
of New Class A Stock, according to that Holder’s Pro Rata Participation Amount,
for a cash payment of the product of the Per Share Purchase Price multiplied by
such Pro Rata Participation Amount.
 
 
 
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(iii)           Equity Backstop by Members of the Crossover Committee.  Pursuant
to the Commitment Letters, the Equity Backstop Parties have, severally and not
jointly, committed to purchase their respective Pro Rata Participation Amount in
the Rights Offering.
 
(iv)           Excess Backstop by the Excess Backstop Parties.  Pursuant to the
Commitment Letters and the Excess Backstop Agreements, the Excess Backstop
Parties have, severally and not jointly, committed to purchase shares of New
Class A Stock underlying Rights not exercised by Eligible CCH I Notes Claim
Holders other than the Equity Backstop Parties.
 
(v)           Overallotment Option.  Pursuant to the Commitment Letters and the
Excess Backstop Agreements, each Excess Backstop Party shall be offered the
Overallotment Option.
 
Each Holder of CCH I Notes Claims that affirmatively represents it is not an
Eligible CCH I Notes Claim Holder on a timely submitted investor certification
shall receive an amount of New Class A Stock equal to the value of the Rights
that such Holder would have been offered if it were an accredited investor or
qualified institutional buyer participating in the Rights Offering.  The value
of a Right will be determined (based on the difference between the aggregate
equity purchase price of New Class A Stock embedded in a Right and the value of
New Class A Stock at the termination of the Rights Offering (assuming that the
Overallotment Option is exercised in full, subject to subsequent upward
adjustment to the extent not exercised in full) that can be purchased upon
exercise of a Right) by CCI in good faith and in consultation with its financial
advisor.  The value determination will be filed within 10 days of the
termination of the Rights Offering with the Bankruptcy Court (assuming that the
Overallotment Option is exercised in full, subject to subsequent upward
adjustment to the extent not exercised in full) that can be purchased upon
exercise of a Right), and notice thereof (which shall include the value of each
Right so determined) shall be delivered to each such Holder that timely
certified it is not an Eligible CCH I Notes Claim Holder within five days of
CCI's determination.  Holders receiving notice shall have 10 days following
receipt of such notice to file a challenge to such notice with the Bankruptcy
Court, whose determination of such value shall be binding.

(d)           Estimated Allowed Amount of Claims:  $4,170,040,378
 
(e)           Projected Percentage Recovery:  12.7%
 
5. Class G-5:  Section 510(b) Claims
 
(a)           Classification.  Class G-5 consists of all Section 510(b) Claims
that may exist against CCH I and CCH I Capital Corp.
 
(b)           Impairment and Voting.  Class G-5 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against CCH I and CCH I Capital Corp. is not
entitled to vote to accept or reject the Plan and will be deemed conclusively to
have rejected the Plan.
 
(c)           Distributions.  Section 510(b) Claims will be cancelled, released,
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
6. Class G-6:  Interests
 
(a)           Classification.  Class G-6 consists of all Interests in CCH I and
CCH I Capital Corp.
 
(b)           Impairment and Voting.  Class G-6 is Impaired by the Plan.  Each
Holder of an Allowed Interest against CCH I and CCH I Capital Corp. is not
entitled to vote to accept or reject the Plan and shall be deemed conclusively
to have rejected the Plan.
 
 
 
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(c)           Distributions.  Interests in CCH I and CCH I Capital Corp. will
remain in place in exchange for New Value Consideration in the amount of $12
million to be contributed by CCI from the Rights Offering.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
H. CCH II and CCH II Capital Corp.
 
1. Class H-1:  Priority Non-Tax Claims
 
(a)           Classification.  Class H-1 consists of all Priority Non-Tax Claims
that may exist against CCH II and CCH II Capital Corp.
 
(b)           Impairment and Voting.  Class H-1 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCH II and CCH II Capital
Corp. is not entitled to vote to accept or reject the Plan and will be deemed
conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCH II and CCH II Capital Corp. and the
applicable Debtors agree to less favorable treatment to such Holder, each Holder
of such Allowed Priority Non-Tax Claim will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date, the date such
Priority Non-Tax Claim is Allowed and the date such Allowed Priority Non-Tax
Claim becomes due and payable, or as soon thereafter as is practicable;
provided, however, that Priority Non-Tax Claims that arise in the ordinary
course of the Debtors’ business and which are not due and payable on or before
the Effective Date will be paid in the ordinary course of business in accordance
with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
2. Class H-2:  Secured Claims
 
(a)           Classification.  Class H-2 consists of all Secured Claims that may
exist against CCH II and CCH II Capital Corp.
 
(b)           Impairment and Voting.  Class H-2 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCH II and CCH II Capital Corp. is
not entitled to vote to accept or reject the Plan and will be deemed
conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCH II and CCH II Capital Corp. and the applicable Debtors
agree to less favorable treatment to such Holder, at the sole option of the
Debtors, (i) each Allowed Secured Claim against CCH II and CCH II Capital Corp.
will be reinstated and rendered Unimpaired in accordance with section 1124 of
the Bankruptcy Code, (ii) each Holder of an Allowed Secured Claim against CCH II
and CCH II Capital Corp. will be paid in full in cash, plus Post-Petition
Interest, on the later of the Distribution Date and the date such Secured Claim
becomes an Allowed Secured Claim, or as soon thereafter as is practicable, or
(iii) each Holder of an Allowed Secured Claim against CCH II and CCH II Capital
Corp. will receive the collateral securing its Allowed Secured Claim, plus
Post-Petition Interest, on the later of the Distribution Date and the date such
Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as is
practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
 
 
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Class H-3:  General Unsecured Claims
 
(a)           Classification.  Class H-3 consists of all General Unsecured
Claims that may exist against CCH II and CCH II Capital Corp.
 
(b)           Impairment and Voting.  Class H-3 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCH II and CCH II Capital
Corp. is entitled to vote to accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCH II and CCH II Capital Corp. and the
applicable Debtors agree to less favorable treatment to such Holder, at the sole
option of the Debtors, (i) each Allowed General Unsecured Claim against CCH II
and CCH II Capital Corp. will be reinstated and rendered Unimpaired in
accordance with section 1124 of the Bankruptcy Code, or (ii) each Holder of an
Allowed General Unsecured Claim against CCH II and CCH II Capital Corp. will be
paid in full in cash on the Distribution Date or as soon thereafter as is
practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
3. Class H-4:  CCH II Notes Claims
 
(a)           Classification.  Class H-4 consists of CCH II Notes Claims.
 
(b)           Impairment and Voting.  Class H-4 is Impaired by the Plan.  Each
Holder of an Allowed CCH II Notes Claim is entitled to vote to accept or reject
the Plan.
 
(c)           Distributions.  The CCH II Notes Claims shall be Allowed in the
aggregate amount of  $2,575,678,701 plus Post-Petition Interest.  Each Holder of
CCH II Notes Claims shall be paid in full in cash in an amount equal to the
Allowed amount of its Claim plus Post-Petition Interest, on the Distribution
Date, unless such Holder is a Rollover Commitment Party or elects to exchange
CCH II Notes for New CCH II Notes pursuant to the Exchange by noting such
election on such Holder’s ballot.  Each Holder of an Allowed CCH II Notes Claim
that elects to exchange as set forth above or is a Rollover Commitment Party,
shall receive the New CCH II Notes as set forth below in a principal amount
equal to the Allowed amount of its CCH II Notes Claim plus Post-Petition
Interest, subject to the Exchange Cutback set forth below.  No partial Exchange
of CCH II Notes shall be allowed.
 
(i)           Exchange.  CCH II shall effectuate the Exchange pursuant to the
Plan.  The aggregate principal amount of the New CCH II Notes shall be equal to
the sum of (x) the Target Amount and (y) $85 million.  Each Holder of an Allowed
CCH II Notes Claim that elects to exchange CCH II Notes for New CCH II Notes
pursuant to the Exchange, and each Rollover Commitment Party, in each case
subject to the Exchange Cutback, shall be entitled to receive (A) New CCH II
Notes with a principal amount equal to the Allowed principal amount of the CCH
II Notes held by such Holder or Rollover Commitment Party, (B) New CCH II Notes
with a principal amount equal to the accrued but unpaid interest on such CCH II
Notes held by such Holder or Rollover Commitment Party to the Petition Date, and
(C) New CCH II Notes with a principal amount equal to Post-Petition Interest on
such CCH II Notes.  No Holder or Rollover Commitment Party shall be entitled to
receive any amounts for any call premiums or prepayment penalty with respect to
the CCH II Notes.
 
(ii)           Rollover Commitment.  Pursuant to the Commitment Letters, the
Rollover Commitment Parties have, severally and not jointly (in the respective
amounts set forth on Annex C), committed to exchange on the Effective Date an
aggregate of $1.21 billion in principal amount of CCH II Notes, plus accrued but
unpaid interest to the Petition Date, plus Post-Petition Interest, but excluding
any call premiums or any prepayment penalties, for New CCH II Notes pursuant to
the Exchange, subject to the Exchange Cutback.
 
(iii)           Exchange Cutback.  Notwithstanding the foregoing, if the
aggregate principal amount of New CCH II Notes to be issued to  Holders of
CCH II Notes Claims (including the Rollover Commitment Parties) electing to
participate in the Exchange would exceed the Target Amount, then each
participating Holder (including the Rollover Commitment Parties) shall receive
its pro rata portion of the Target Amount of New CCH II Notes in the same
proportion that the Allowed amount of CCH II Notes sought to be exchanged by
such Holder
 
 
 
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bears to the total Allowed amount of CCH II Notes sought to be exchanged, and
the remainder of such Holder’s Allowed CCH II Notes Claims shall be paid in full
in cash on the Distribution Date.
 
(iv)           New CCH II Notes Commitment.  Pursuant to the Commitment Letters,
the New CCH II Notes Commitment Parties have, severally and not jointly (in the
respective amounts set forth on Annex D), committed to purchase additional New
CCH II Notes in an aggregate principal amount of $267 million.  If the aggregate
principal amount of New CCH II Notes to be issued to Holders (including the
Rollover Commitment Parties) electing to participate in the Exchange is less
than the Target Amount, then the New CCH II Notes Commitment shall be funded up
to the extent of such shortfall.
 
(d)           Estimated Allowed Amount of Claims:  $2,575,678,701
 
(e)           Projected Percentage Recovery:  100%
 
4. Class H-5:  Section 510(b) Claims
 
(a)           Classification.  Class H-5 consists of all Section 510(b) Claims
that may exist against CCH II and CCH II Capital Corp.
 
(b)           Impairment and Voting.  Class H-5 is Impaired by the Plan.  Each
Holder of a Section 510(b) Claim against CCH II and CCH II Capital Corp. is not
entitled to vote to accept or reject the Plan and will be deemed conclusively to
have rejected the Plan.
 
(c)           Distributions.  Section 510(b) Claims will be cancelled, released,
and extinguished and the Holders of Section 510(b) Claims will receive no
distribution under the Plan on account of such Claims.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
5. Class H-6:  Interests
 
(a)           Classification.  Class H-6 consists of all Interests in CCH II and
CCH II Capital Corp.
 
(b)           Impairment and Voting.  Class H-6 is Impaired by the Plan.  Each
Holder of an Allowed Interest against CCH II and CCH II Capital Corp. is not
entitled to vote to accept or reject the Plan and shall be deemed conclusively
to have rejected the Plan.
 
(c)           Distributions.  Interests in CCH II and CCH II Capital Corp. will
remain in place in exchange for New Value Consideration in the amount of $15
million to be contributed by CCI from the Rights Offering.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  0%
 
I. CCOH and CCO Holdings Capital Corp.
 
1. Class I-1:  CCOH Credit Facility Claims
 
(a)           Classification.  Class I-1 consists of CCOH Credit Facility
Claims.
 
(b)           Impairment and Voting.  Class I-1 is Unimpaired by the Plan.  Each
Holder of an Allowed CCOH Credit Facility Claim is not entitled to vote to
accept or reject the Plan and will be deemed conclusively to have accepted the
Plan.
 
(c)           Distributions.  Each Allowed CCOH Credit Facility Claim will be
reinstated and rendered Unimpaired in accordance with section 1124 of the
Bankruptcy Code.
 
 
 
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(d)           Estimated Allowed Amount of Claims:  $350,000,000
 
(e)           Projected Percentage Recovery:  100%
 
2. Class I-2:  CCOH Notes Claims
 
(a)           Classification.  Class I-2 consists of CCOH Notes Claims.
 
(b)           Impairment and Voting.  Class I-2 is Unimpaired by the Plan.  Each
Holder of an Allowed CCOH Notes Claim is not entitled to vote to accept or
reject the Plan and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Each Allowed CCOH Notes Claim will be reinstated
and rendered Unimpaired and each Holder of such Claims will receive
Post-Petition Interest in accordance with section 1124 of the Bankruptcy Code.
 
(d)           Estimated Allowed Amount of Claims:  $822,471,731
 
(e)           Projected Percentage Recovery:  100%
 
3. Class I-3:  Priority Non-Tax Claims
 
(a)           Classification.  Class I-3 consists of all Priority Non-Tax Claims
that may exist against CCOH and CCO Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class I-3 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCOH and CCO Holdings
Capital Corp. is not entitled to vote to accept or reject the Plan and will be
deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCOH and CCO Holdings Capital Corp. and the
applicable Debtors agree to less favorable treatment to such Holder, each Holder
of such Allowed Priority Non-Tax Claim will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date, the date such
Priority Non-Tax Claim is Allowed and the date such Allowed Priority Non-Tax
Claim becomes due and payable, or as soon thereafter as is practicable;
provided, however, that Priority Non-Tax Claims that arise in the ordinary
course of the Debtors’ business and which are not due and payable on or before
the Effective Date will be paid in the ordinary course of business in accordance
with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
4. Class I-4:  Secured Claims
 
(a)           Classification.  Class I-4 consists of all Secured Claims (but
excluding CCOH Credit Facility Claims) that may exist against CCOH and CCO
Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class I-4 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCOH and CCO Holdings Capital Corp.
is not entitled to vote to accept or reject the Plan and will be deemed
conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCOH and CCO Holdings Capital Corp. and the applicable
Debtors agree to less favorable treatment to such Holder, at the sole option of
the Debtors, (i) each Allowed Secured Claim against CCOH and CCO Holdings
Capital Corp. will be reinstated and rendered Unimpaired in accordance with
section 1124 of the Bankruptcy Code, (ii) each Holder of an Allowed Secured
Claim against CCOH and CCO Holdings Capital Corp. will be paid in full in cash,
plus Post-Petition Interest, on the later of the Distribution Date and the date
such Secured Claim becomes an Allowed Secured Claim, or as soon thereafter as is
practicable, or (iii) each Holder of an Allowed Secured Claim
 
 
 
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against CCOH and CCO Holdings Capital Corp. will receive the collateral securing
its Allowed Secured Claim, plus Post-Petition Interest, on the later of the
Distribution Date and the date such Secured Claim becomes an Allowed Secured
Claim, or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
5. Class I-5:  General Unsecured Claims
 
(a)           Classification.  Class I-5 consists of all General Unsecured
Claims that may exist against CCOH and CCO Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class I-5 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCOH and CCO Holdings
Capital Corp. is entitled to vote to accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCOH and CCO Holdings Capital Corp. and the
applicable Debtors agree to less favorable treatment to such Holder, at the sole
option of the Debtors, (i) each Allowed General Unsecured Claim against CCOH and
CCO Holdings Capital Corp. will be reinstated and rendered Unimpaired in
accordance with section 1124 of the Bankruptcy Code, or (ii) each Holder of an
Allowed General Unsecured Claim against CCOH and CCO Holdings Capital Corp. will
be paid in full in cash on the Distribution Date or as soon thereafter as is
practicable.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
6. Class I-6:  Interests
 
(a)           Classification.  Class I-6 consists of all Interests in CCOH and
CCO Holdings Capital Corp.
 
(b)           Impairment and Voting.  Class I-6 is Unimpaired by the Plan.  Each
Holder of an Allowed Interest against CCOH and CCO Holdings Capital Corp. is not
entitled to vote to accept or reject the Plan and will be deemed conclusively to
have accepted the Plan.
 
(c)           Distributions.  Interests in CCOH and CCO Holdings Capital Corp.
will be reinstated and rendered Unimpaired in accordance with section 1124 of
the Bankruptcy Code.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
J.  
CCO (and its direct and indirect subsidiaries)

 
1. Class J-1:  CCO Credit Facility Claims
 
(a)           Classification.  Class J-1 consists of CCO Credit Facility Claims.
 
(b)           Impairment and Voting.  Class J-1 is Unimpaired by the Plan.  Each
Holder of an Allowed CCO Credit Facility Claim is not entitled to vote to accept
or reject the Plan and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Each Allowed CCO Credit Facility Claim will be
reinstated and rendered Unimpaired in accordance with section 1124 of the
Bankruptcy Code.  The Debtors will waive and/or abjure any right to require any
lender to make loans (whether term, incremental term, revolving or swingline
loans) under the CCO Credit Facility, other than loans outstanding as of the
Effective Date.
 
 
 
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(d)           Estimated Allowed Amount of Claims:  $8,246,604,237
 
(e)           Projected Percentage Recovery:  100%
 
2. Class J-2:  CCO Swap Agreements Claims
 
(a)           Classification.  Class J-2 consists of CCO Swap Agreements Claims.
 
(b)           Impairment and Voting.  Class J-2 is Impaired by the Plan.  Each
Holder of an Allowed CCO Swap Agreements Claim against CCO is entitled to vote
to accept or reject the Plan; provided, however, the Debtors reserve their right
to argue the proposed distribution to each Holder of an Allowed CCO Swap
Agreements Claim renders Class J-2 Unimpaired, not entitled to vote to accept or
reject the Plan, and deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  CCO Swap Agreements Claims will be Allowed in the
aggregate amount determined by the Bankruptcy Court, plus Post-Petition
Interest, but excluding any call premiums or any prepayment penalties.   Each
Holder of an Allowed CCO Swap Agreements Claim shall be paid in full in cash,
plus Post-Petition Interest, on the later of the Distribution Date and the date
such CCO Swap Agreements Claim becomes an Allowed CCO Swap Agreements Claim, or
as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $497,417,000
 
(e)           Projected Percentage Recovery:  100%
 
3. Class J-3:  CCO Notes Claims
 
(a)           Classification.  Class J-3 consists of CCO Notes Claims.
 
(b)           Impairment and Voting.  Class J-3 is Unimpaired by the Plan.  Each
Holder of an Allowed CCO Notes Claim is not entitled to vote to accept or reject
the Plan and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Each Allowed CCO Notes Claim will be reinstated
and rendered Unimpaired in accordance with section 1124 of the Bankruptcy Code.
 
(d)           Estimated Allowed Amount of Claims:  $2,400,068,487
 
(e)           Projected Percentage Recovery:  100%
 
4. Class J-4:  Priority Non-Tax Claims
 
(a)           Classification.  Class J-4 consists of all Priority Non-Tax Claims
that may exist against CCO and its direct and indirect subsidiaries.
 
(b)           Impairment and Voting.  Class J-4 is Unimpaired by the Plan.  Each
Holder of an Allowed Priority Non-Tax Claim against CCO and its direct and
indirect subsidiaries is not entitled to vote to accept or reject the Plan and
will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Priority Non-Tax Claim against CCO and its direct and indirect subsidiaries and
the applicable Debtors agree to less favorable treatment to such Holder, each
Holder of such Allowed Priority Non-Tax Claim will be paid in full in cash, plus
Post-Petition Interest, on the later of the Distribution Date, the date such
Priority Non-Tax Claim is Allowed and the date such Allowed Priority Non-Tax
Claim becomes due and payable, or as soon thereafter as is practicable;
provided, however, that Priority Non-Tax Claims that arise in the ordinary
course of the Debtors’ business and which are not due and payable on or before
the Effective Date will be paid in the ordinary course of business in accordance
with the terms thereof.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
 
 
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(e)           Projected Percentage Recovery:  100%
 
5. Class J-5:  Secured Claims
 
(a)           Classification.  Class J-5 consists of all Secured Claims (but
excluding CCO Credit Facility Claims, CCO Notes Claims and CCO Swap Agreements
Claims) that may exist against CCO and its direct and indirect subsidiaries.
 
(b)           Impairment and Voting.  Class J-5 is Unimpaired by the Plan.  Each
Holder of an Allowed Secured Claim against CCO and its direct and indirect
subsidiaries is not entitled to vote to accept or reject the Plan and will be
deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
Secured Claim against CCO and its direct and indirect subsidiaries and the
applicable Debtors agree to less favorable treatment to such Holder, at the sole
option of the Debtors, (i) each Allowed Secured Claim against CCO and its direct
and indirect subsidiaries will be reinstated and rendered Unimpaired in
accordance with section 1124 of the Bankruptcy Code, (ii) each Holder of an
Allowed Secured Claim against CCO and its direct and indirect subsidiaries will
be paid in full in cash, plus Post-Petition Interest, on the later of the
Distribution Date and the date such Secured Claim becomes an Allowed Secured
Claim, or as soon thereafter as is practicable, or (iii) each Holder of an
Allowed Secured Claim against CCO and its direct and indirect subsidiaries will
receive the collateral securing its Allowed Secured Claim, plus Post-Petition
Interest, on the later of the Distribution Date and the date such Secured Claim
becomes an Allowed Secured Claim, or as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $8,080,000
 
(e)           Projected Percentage Recovery:  100%
 
6. Class J-6:  General Unsecured Claims
 
(a)           Classification.  Class J-6 consists of all General Unsecured
Claims that may exist against CCO and its direct and indirect subsidiaries other
than all General Unsecured Claims against CCO and its direct and indirect
subsidiaries held by any CII Settlement Claim Party.
 
(b)           Impairment and Voting.  Class J-6 is Impaired by the Plan.  Each
Holder of an Allowed General Unsecured Claim against CCO and its direct and
indirect subsidiaries is entitled to vote to accept or reject the Plan.
 
(c)           Distributions.  Except to the extent that a Holder of an Allowed
General Unsecured Claim against CCO and its direct and indirect subsidiaries and
the applicable Debtors agree to less favorable treatment to such Holder, at the
sole option of the Debtors, (i) each Allowed General Unsecured Claim against CCO
and its direct and indirect subsidiaries will be reinstated and rendered
Unimpaired in accordance with section 1124 of the Bankruptcy Code, or (ii) each
Holder of an Allowed General Unsecured Claim against CCO and its direct and
indirect subsidiaries will be paid in full in cash on the Distribution Date or
as soon thereafter as is practicable.
 
(d)           Estimated Allowed Amount of Claims:  $42,207,023
 
(e)           Projected Percentage Recovery:  100%
 
7. Class J-7:  Interests (other than CC VIII Preferred Units held by a CII
Settlement Claim Party)
 
(a)           Classification.  Class J-7 consists of all Interests in CCO and
its direct and indirect subsidiaries (other than CC VIII Preferred Units held by
a CII Settlement Claim Party).
 
(b)           Impairment and Voting.  Class J-7 is Unimpaired by the Plan.  Each
Holder of an Allowed Interest against CCO and its direct and indirect
subsidiaries (other than CC VIII Preferred Units held by a
 
 
 
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CII Settlement Claim Party) is not entitled to vote to accept or reject the Plan
and will be deemed conclusively to have accepted the Plan.
 
(c)           Distributions.  Interests in CCO and its direct and indirect
subsidiaries (other than CC VIII Preferred Units held by a CII Settlement Claim
Party) shall be reinstated and rendered Unimpaired in accordance with section
1124 of the Bankruptcy Code.
 
(d)           Estimated Allowed Amount of Claims:  $0
 
(e)           Projected Percentage Recovery:  100%
 
 
 
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Management of the Company After the Effective Date
 
The Plan provides that at least CCI’s Chief Executive Officer and Chief
Operating Officer will continue in their current positions.  Other key
executives of the Reorganized Debtors will be determined by the Board of
Directors in consultation with CCI’s Chief Executive Officer.  Biographical
information for Neil Smit, President and Chief Executive Officer of CCI, Michael
J. Lovett, Executive Vice President and Chief Operating Officer of CCI and
Eloise E. Schmitz, Executive Vice President and Chief Financial Officer of CCI,
is set forth below:
 
 Neil Smit — President and Chief Executive Officer
 
Neil Smit joined CCI in August 2005 as President, Chief Executive Officer and
Director. Mr. Smit has more than 20 years of experience working with
multi-service providers and leading consumer brands. Prior to joining CCI, Mr.
Smit worked at Time Warner, Inc. most recently serving as the President of Time
Warner’s America Online Access Business, overseeing Internet access services
including America OnLine (“AOL”), CompuServe, and Netscape ISP. He also served
at AOL as Executive Vice President, Member Services; Chief Operating Officer of
MapQuest and several other operating roles. Prior to joining AOL in 2000, Mr.
Smit was a regional president with Nabisco and was with Pillsbury in a number of
management positions. Mr. Smit served for five and a half years on active duty
in the Navy SEAL Teams and retired from the service as a lieutenant commander.
 
Mr. Smit serves on the boards of the National Cable and Telecommunications
Association, CableLabs and C-SPAN. He has a bachelor’s of science degree from
Duke University and a master’s degree from Tufts University’s Fletcher School.
 
 Michael J. Lovett — Executive Vice President and Chief Operating Officer
 
Mike Lovett is Executive Vice President and Chief Operating Officer, with
responsibility for oversight of the Debtors’ two operating groups and
company-wide customer care. Mr. Lovett was promoted to Executive Vice President
of Operations and Customer Care in September 2004, and to his current position
in April 2005. He joined CCI in August 2003 as Senior Vice President of
Operations Support, providing strategic and tactical support to field operations
to ensure cross-functional alignment of all elements of the Company.
 
Mr. Lovett’s career in cable television began in 1980 with Centel Communications
where he held a number of positions in operations. He was with Jones Intercable,
Inc. from 1989 to 1999, rising to Senior Vice President with responsibility for
operations in nine states; and AT&T Broadband as Regional Vice President of
Operations from June 1999 to November 2000. He served as Executive Vice
President of Operations for OneSecure, Inc., a startup managed security service
company providing management/monitoring of firewalls and virtual private
networks, from November 2000 to December 2001; and was Chief Operating Officer
for Voyant Technologies Inc., a voice conferencing hardware/software solutions
provider in Denver, from December 2001 to August 2003.
 
 Eloise  E. Schmitz — Executive Vice President and Chief Financial Officer
 
Eloise Schmitz is Executive Vice President and Chief Financial Officer for CCI.
Ms. Schmitz manages the Debtors’ mergers and acquisitions, strategic planning
and capital structure activities, as well as the Company’s financial functions,
including accounting, financial planning and analysis, tax, and treasury.
 
Ms. Schmitz joined CCI in July 1998 as Vice President, Finance and Acquisitions.
Prior to joining CCI, Ms. Schmitz was Vice President, Group Manager, of the
Franchise and Communications Group for Mercantile Bank, now US Bank, in St.
Louis. There, she was responsible for initiating, structuring, and arranging
leverage-acquisition debt facilities for companies in the telecommunications and
media industries. Before that, she served as a corporate banker at First Union
for five years.
 
 
 
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Composition of New Board of Directors After the Effective Date
 
Under the Plan, upon the Debtors’ emergence from bankruptcy, the Reorganized
Company’s initial Board of Directors will be fixed at 11 members.  Each
projected holder of 10% or more of the voting power of the Reorganized Company
on the Effective Date (and giving effect to the Overallotment Option) based on
such holder’s Pro Rata share of New Class A Stock (i) to be received in respect
of its CCH I Notes Claims, (ii) purchased pursuant to its exercise of Rights and
(iii) purchased pursuant to the exercise by such holder of its Overallotment
Option, if any, on or prior to the date that is five business days prior to the
commencement of the Confirmation Hearing, will have the right to appoint one
member of the initial Board of Directors upon emergence for each 10% of the
voting power attributable to such holder’s New Class A Stock based on clauses
(i) through (iii) above.  Mr. Allen will have the right to appoint four of the
11 members of the initial Board of Directors, and Neil Smit, the President and
Chief Executive Officer of the Reorganized Company, will also serve on the
initial Board of Directors.  The identity of these members will be disclosed in
a supplement to the Plan prior to the hearing on Confirmation of the
Plan.  Members of the initial Board of Directors will serve until the next
annual meeting of stockholders which will not be held until at least 12 months
after the Effective Date.  Thereafter, for as long as shares of New Class B
Stock are outstanding, holders of New Class B Stock will have the right to elect
35% of the members of the Board of Directors (rounded up to the next whole
number), and all other members of the Board of Directors will be elected by
majority vote of the holders of New Class A Stock and New Preferred Stock,
voting together as a single class.  In addition, members of the Board of
Directors elected by holders of New Class B Stock will have no less than
proportionate representation on each committee of the Board of Directors,
subject to applicable SEC and stock exchange rules and except for any committee
formed solely for the purpose of reviewing, recommending and/or authorizing any
transaction in which holders of New Class B Stock or their affiliates (other
than the Reorganized Company or its subsidiaries) are interested parties.  In
addition, CCI’s current Chief Executive Officer and Chief Operating Officer will
continue in their same positions.
 
In order for the Board of Directors to take action at any meeting, a quorum must
be present.  Because the Amended and Restated Certificate of Incorporation
provides for 11 seats on the Board of Directors, in order to establish a quorum
at any meeting of the Board of Directors, six or more directors must be present.
 
Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will
disclose, prior to Confirmation of the Plan, the identity and affiliations of
any Person proposed to serve on the initial Board of Directors or be an officer
of each of the Reorganized Debtors.  To the extent any such director or officer
of CCI is an “insider” under the Bankruptcy Code, the nature and amount of any
compensation to be paid to such director or officer will also be disclosed.
 
 
 
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The Reorganized Debtors Upon Emergence
 
 The Reorganized Debtors’ Business Upon Emergence
 
The Debtors will continue to be principally engaged in the operation of
broadband communications businesses in the United States.  We expect to continue
to offer traditional cable video programming, high-speed Internet access, and
telephone service, as well as advanced broadband services (such as Charter
OnDemand™ video service, high definition television service, and digital video
recorder service).
 
 The Reorganized Debtors’ Capital Structure Upon Emergence
 
 Secured Bank Debt
 
Following consummation of the Plan, the CCO Credit Facility and the CCOH Credit
Facility will remain outstanding.  However, the Debtors have irrevocably waived
any right to engage in any additional borrowing under the reinstated CCO Credit
Facility and the reinstated CCOH Credit Facility.  See “Our History and Our
Chapter 11 Cases — The Debtors’ Pre-Petition Capital Structure.”
 
 Outstanding Notes
 
Following consummation of the Plan, all of the currently outstanding notes
issued by CCOH and CCO will remain outstanding, along with the New CCH II Notes
to be issued under the Plan on the Effective Date.  See “Our History and Our
Chapter 11 Cases — The Debtors’ Pre-Petition Capital Structure,” which begins on
page 18, and “Description of the New CCH II Notes,” which begins on page 62.
 
 Trade Claims
 
Pursuant to the Plan, and except as otherwise provided in the Plan, the Debtors
will continue to pay trade Claims in the ordinary course of business.
 
 Interests of Certain Reorganized Debtors
 
Upon consummation of the Plan, New Common Stock, New Preferred Stock and
additional new stock of reorganized CII will be issued in accordance with the
terms of the Plan.  Reorganized CII’s equity interests in reorganized Holdco to
the extent of a 1% direct equity interest in reorganized Holdco will not be
cancelled, released or extinguished, and reorganized CII will retain such
interest in reorganized Holdco under the Plan.  The Reorganized Company will
receive all remaining equity interests in reorganized Holdco.  See “Description
of Capital Stock,” which begins on page 64.
 
Interests in Holdco, CCHC, CCH, Charter Communications Holdings Capital Corp.,
CIH, CCH I Holdings Capital Corp., CIH, CCH I Capital Corp., CCH II, CCH II
Capital Corp., Enstar Communications Corporation and Charter Gateway, LLC shall
remain in place in exchange for new value consideration to be contributed by the
Reorganized Company from the Rights Offering.
 
Interests in CCO Holdings, CCO and its subsidiaries, except for the preferred
membership interests in CC VIII, will be Unimpaired and will be reinstated and
remain in place following the Effective Date.  Reorganized CCH I shall retain
its preferred membership interests in CC VIII and the preferred membership
interests in CC VIII held by CII shall be deemed transferred, automatically and
without further action by any party, to the Reorganized Company.
 
 
 
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The Reorganized Company’s Capitalization Upon Consummation of the Plan
 
The following table sets forth both the Reorganized Company’s and its
consolidated subsidiaries’ cash and cash equivalents and capitalization as of
February 28, 2009, (i) on an actual basis and (ii) on an as-adjusted basis to
reflect the consummation of the Plan and application of the proceeds from the
Rights Offering and New CCH II Notes Commitment, assuming $267 million aggregate
principal amount of New CCH II Notes are issued and sold pursuant to the New
CCH II Notes Commitment, as described under the heading “Important Aspects of
the Plan — Use of Proceeds,” and assumes an Effective Date of September 30,
2009.
 
 
This table should be read together with the more detailed information contained
elsewhere in this Disclosure Statement, including “Treatment of Claims Against
and Interests in the Debtors,” beginning on page 32.
 

   
As of February 28, 2009
     
Pre-Emergence
   
Post-Emergence
     
(Unaudited)
     
(in millions except per
share data)
 
Cash and Cash Equivalents
  $ 722     $ 571                    
Long-Term Debt:
               
Charter Communications, Inc.:
               
5.875% convertible senior notes due 2009
  $ 3     $ —  
6.500% convertible senior notes due 2027(1)
    376       —  
Charter Communications Holdings, LLC:
               
Senior and senior discount notes
    440       —  
CCH I Holdings, LLC:
               
Senior and senior discount notes(1)
    2,534       —  
CCH I, LLC:
               
11.000% senior notes due 2015(1)
    4,071       —  
CCH II, LLC:
               
10.250% senior notes due 2010
    1,857       —  
10.250% senior notes due 2013(1)
    598       —  
13.500% senior notes due 2016
    —       1,706  
CCO Holdings, LLC:
               
8.750% senior notes due 2013
    797       797  
Charter Communications Operating, LLC:
               
8.000% senior second lien notes due 2012
    1,100       1,100  
8 3/8% senior second lien notes due 2014
    770       770  
10.875% senior second lien notes due 2014
    527       527  
Credit Facilities:
               
CCOH
  $ 350     $ 350  
CCO
    8,247       8,247                    
Total Long-Term Debt
  $ 21,670     $ 13,497                    
Loans Payable — Related Party(2)
    76       —  
Preferred Stock
    —       72  
Noncontrolling Interest(3)
    167       —  
Shareholders’ Equity (Deficit)
    (10,544 )     2,413  
Total Capitalization
  $ 11,369     $ 15,982  
__________________
               

 
(1)
The accreted values presented above generally represent the principal amount of
the notes less the original issue discount at the time of sale, plus the
accretion to the balance sheet date.  However, the current accreted

 
 
 
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value for legal purposes and notes indenture purposes (the amount that is
currently payable if the debt becomes immediately due) is equal to the principal
amount of notes.

 
(2)
Represents an exchangeable accreting note that was issued in October 2005 by
CCHC in relation to the CC VIII settlement.

 
(3)
Noncontrolling interest represents Mr. Allen’s 30% preferred membership
interests in CC VIII, an indirect subsidiary of Holdco and an allocation of
approximately 47% of Holdco’s net losses since January 2009.

 
 The Debtors’ Organizational and Capital Structure Upon Consummation of the Plan
 
The chart on the following page sets forth the Debtors’ organizational and
capital structure on the Effective Date of the Plan.  The equity ownership,
voting percentages, and indebtedness amounts shown below are approximations
based on information available to the Debtors as of February 28, 2009, and do
not give effect to any exercise, conversion or exchange of then outstanding
options, and other convertible or exchangeable securities or intercompany debt
eliminated in consolidation for accounting purposes.  Indebtedness amounts shown
below are accreted values for financial reporting purposes as of December 31,
2008 and do not give effect to any debt eliminated in consolidation.  All
amounts shown reflect the confirmation of the Plan and application of the
proceeds from the Rights Offering and New CCH II Notes Commitment, assuming $267
million aggregate principal amount of New CCH II Notes are issued and sold
pursuant to the New CCH II Notes Commitment, as described under the heading
“Important Aspects of the Plan — Use of Proceeds.”
 
 
 
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Org Chart [corporgcapstructure.jpg]
 
 
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__________________
 

(1) CCH II, LLC (“CCH II”):
13.500% senior notes due 2016

Guarantee:  The notes due October 2016 are guaranteed on a senior unsecured
basis by CCH.
Security Interest:  None.

(2) CCO Holdings, LLC (“CCOH”):
8 ¾% senior notes due November 15, 2013 ($796 million)
CCOH Credit Facility ($350 million)

Guarantee:  None
Security Interest: The obligations of CCOH under the junior credit facility are
secured by a junior lien on CCOH’s equity interest in Charter Communications
Operating, LLC and all proceeds of such equity interest, junior to the liens of
the holders of the notes listed under item (3) below.

(3) Charter Communications Operating, LLC (“CCO”):
8.000% senior second-lien notes due April 30, 2012 ($1,100 million)
8 3/8% senior second-lien notes due April 30, 2014 ($770 million)
10.875% senior second-lien notes due September 15, 2014 ($527 million)
CCOH Credit Facility ($8,246 million)

Guarantee:  All CCO notes are guaranteed by CCOH and those subsidiaries of CCO
that are guarantors of, or otherwise obligors with respect to, indebtedness
under the CCO credit facilities.  The CCO Credit Facility is guaranteed by CCOH
and certain subsidiaries of CCO.
Security Interest:  The CCO notes and related note guarantees are secured by a
second-priority lien on substantially all of CCO’s and certain of its
subsidiaries’ assets that secure the obligations of CCO or any subsidiary of CCO
with respect to the CCO senior secured credit facilities.  The CCO Credit
Facility is secured by a first-priority lien on substantially all of the assets
of CCO and its subsidiaries and a pledge by CCOH of its equity interests in CCO.

--------------------------------------------------------------------------------

*All amounts outstanding assume an Effective Date of September 30, 2009

Description of the New CCH II Notes
 
The New CCH II Notes will be issued by reorganized CCH II and reorganized CCH II
Capital Corp.  The New CCH II Notes will pay interest in cash semi-annually in
arrears at the rate of 13.5% per annum and will be unsecured.  The notes will
mature on [●], 2016.
 
The New CCH II Notes will be issued pursuant to an indenture a draft of which
will be available on CCI’s website at www.charter.com under the Financial
Restructuring tab at least 10 days prior to the Voting Deadline.  This
description is not complete and is qualified in it entirety by the form of the
indenture.
 
 Redemption
 
At any time prior to the third anniversary of their issuance, reorganized CCH II
will be permitted to redeem up to 35% of the New CCH II Notes with the proceeds
of an equity offering, for cash equal to 113.5% of the then-outstanding
principal amount of the New CCH II Notes being redeemed, plus accrued and unpaid
interest.
 
At or any time prior to the third anniversary of their issuance, reorganized
CCH II will be permitted to redeem the New CCH II Notes, in whole or in part, at
the principal amount outstanding plus a “make-whole” premium calculated based on
a discount rate of the Treasury rate plus 50 basis points.
 
After the third anniversary of their issuance, the New CCH II Notes will be
subject to redemption by reorganized CCH II for cash equal to 106.75% of the
principal amount of the New CCH II Notes being redeemed for redemptions made
during the fourth year following their issuance, 103.375% for redemptions made
during the fifth year following their issuance, 101.6875% in the sixth year
following their issuance, and 100.000% for redemptions made thereafter, in each
case, together with accrued and unpaid interest.
 
 Change of Control Offer
 
Upon the occurrence of a change of control, as defined in the indenture, each
holder of New CCH II Notes will have the right to require reorganized CCH II to
repurchase all or any part of that holder’s New CCH II Notes at
 
 
 
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a repurchase price equal to 101% of the aggregate principal amount of the New
CCH II Notes repurchased plus accrued and unpaid interest thereon, if any, to
the date of purchase.
 
 Restrictive Covenants
 
The indenture will contain restrictions on the ability of reorganized CCH II and
reorganized CCH II’s restricted subsidiaries to, without limitation: (i) incur
indebtedness, (ii) create liens, (iii) pay dividends or make distributions in
respect of capital stock and other restricted payments, (iv) make investments,
(v) sell assets, (vi) create restrictions on the ability of restricted
subsidiaries to make certain payments and asset transfers, (vii) enter into
sale-leaseback transactions, (viii) enter into transactions with affiliates,
(ix) consolidate, merge or sell all or substantially all of their assets or (x)
engage in certain types of transactions with respect to indebtedness of parents
and subsidiaries.  However, such covenants will be subject to a number of
important qualifications and exceptions including, without limitation,
provisions allowing reorganized CCH II and its restricted subsidiaries to incur
additional indebtedness as long as reorganized CCH II’s leverage ratio is not
greater than 5.75 to 1.0.  In addition, reorganized CCH II will be permitted to
incur up to $1 billion of additional indebtedness under one or more credit
facilities and will be permitted to incur another $300 million under a “general”
exception.
 
 Events of Default
 
Holders of at least 25% in the aggregate of the New CCH II Notes then
outstanding may accelerate the obligations due under the notes upon any of the
following circumstances: (i) default for 30 consecutive days in the payment when
due of interest on the New CCH II Notes; (ii) default in the payment when due of
principal of or premium, if any, on the New CCH II Notes; (iii) the failure to
comply with the indenture’s change of control or merger covenants; (iv) the
failure to comply with other covenants for 30 consecutive days after notice is
given by holders of at least 25% of the aggregate principal amount of the New
CCH II Notes then outstanding; (v) the occurrence of a payment default or
acceleration of indebtedness in excess of $100 million under another instrument
of reorganized CCH II or its restricted subsidiaries; (vi) failure to pay a
judgment in excess of $100 million against reorganized CCH II or its restricted
subsidiaries which judgment is not paid, discharged or stayed for 60 days; or
(viii) certain events of bankruptcy, insolvency, or liquidation.
 
 Amendment, Supplement and Waiver
 
Without the consent of holders of the New CCH II Notes, reorganized CCH II and
the trustee may amend or supplement the indenture or the notes to (i) cure any
ambiguity, defect or inconsistency; (ii) provide for uncertificated notes in
addition to or in place of certificated notes; (iii) provide for or confirm the
issuance of additional New CCH II Notes; (iv) provide for the assumption of
obligations under the New CCH II Notes in the case of a merger or consolidation
or sale of all or substantially all of the assets of reorganized CCH II and its
restricted subsidiaries; (v) make any change that would provide any additional
rights or benefits to the holders of New CCH II Notes or that does not adversely
affect the legal rights of holders of the New CCH II Notes under the indenture;
(vi) release any subsidiary guarantee in accordance with the provisions of the
indenture; (vii) add a guarantor; or (viii) comply with requirements of the SEC
in order to effect or maintain the qualification of the indenture under the
Trust Indenture Act of 1939, as amended, or otherwise as necessary to comply
with applicable law.
 
Except as provided in the next paragraph, the indenture or the New CCH II Notes
may be amended or supplemented with the consent of the holders of at least a
majority in aggregate principal amount of the New CCH II Notes then outstanding.
 
Without the consent of each holder of New CCH II Notes affected thereby, an
amendment, supplement or waiver may not (with respect to any New CCH II Notes
held by such holder): (i) reduce the principal amount of such notes; (ii) change
the fixed maturity of such notes or reduce the premium payable upon redemption
of such notes; (iii) reduce the rate of or extend the time for payment of
interest on such notes; (iv) waive a default or an event of default in the
payment of principal of, or premium, if any, or interest on the notes (except a
rescission of acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the notes and a waiver of the payment default that
resulted from such acceleration); (v) make such notes payable in money other
than that stated in such notes; (vi) make any change in the provisions of the
indenture relating to waivers of past defaults applicable to any notes or the
rights of holders thereof to receive payments of principal of, or premium, if
any, or
 
 
 
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interest on such notes; (vii) waive certain redemption payments with respect to
such notes; or (viii) make any changes to the provisions of the indenture
relating to amendments and waivers requiring the consent of holders.
 
Description of Capital Stock
 
The following is a description of the material terms of the Reorganized
Company’s capital stock to be issued upon emergence from Chapter 11.  This
description also summarizes certain provisions of the Delaware General
Corporation Law (“DGCL”).
 
 Authorized Capital Stock
 
Following the Debtors’ emergence from bankruptcy, the Reorganized Company will
have the authority to issue a total of 1,175,000,000 shares of capital stock,
consisting of:
 
·  
900,000,000 shares of New Class A Stock;

 
·  
25,000,000 shares of New Class B Stock; and

 
·  
250,000,000 shares of preferred stock, including 72,000 shares of New Preferred
Stock.

 
 Outstanding Capital Stock
 
The number of shares of capital stock to be issued and outstanding as of the
Effective Date will be determined prior to the Confirmation of the Plan.
 
 Rights and Preferences of the Reorganized Company’s Capital Stock
 
 Voting Rights
 
Holders of shares of our capital stock issued upon emergence will be entitled to
vote on all matters submitted to a vote of the Reorganized Company’s
stockholders, including the election of directors as follows:
 
·  
Shares of New Class A Stock will be entitled to one vote per share;

 
·  
Shares of New Class B Stock will be entitled to a number of votes per share,
which at all times when shares of New Class B Stock are outstanding will
represent 35% of the combined voting power of the Reorganized Company’s capital
stock; and

 
·  
Shares of New Preferred Stock will be entitled to one vote per share.

 
Holders of capital stock of the Reorganized Company, other than Mr. Allen and
certain of his affiliates, will be subject to a reduction of their voting power
to comply with the Voting Threshold.  The holders of New Common Stock and
holders of New Preferred Stock and their respective affiliates will not have
cumulative voting rights.
 
Under the amended and restated bylaws of the Reorganized Company, the number of
members of the Board of Directors shall be fixed at 11 members.  Except for the
initial Board of Directors, which will be appointed pursuant to the terms of the
Plan as described above in “Composition of New Board of Directors After the
Effective Date,” for as long as shares of New Class B Stock are outstanding,
holders of New Class B Stock will have the right to elect 35% of the members of
the Board of Directors (rounded up to the next whole number), and all other
members of the Board of Directors will be elected by majority vote of the
holders of New Class A Stock (and any series of preferred stock then entitled to
vote at an election of the directors).
 
Under the Amended and Restated Certificate of Incorporation, (i) any director
may be removed for cause by the affirmative vote of a majority of the voting
power of the outstanding New Class A Stock and New Class B Stock (and any series
of preferred stock then entitled to vote at an election of directors), voting
together as a single class, (ii) any director elected by the holders of New
Class B Stock voting separately as a class may be removed
 
 
 
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from office, without cause, solely by the vote of a majority of the voting power
of the outstanding New Class B Stock, voting as a separate class, and (iii) any
director elected by the vote of the holders of New Class A Stock voting
separately as a class (including holders of voting preferred stock, as
applicable) may be removed from office, without cause, solely by the vote of a
majority of the voting power of the outstanding New Class A Stock, voting
separately as a class (including any holders of voting preferred stock entitled
to vote thereon).
 
 Common Stock
 
 General
 
The New Class B Stock will be identical to the New Class A Stock except with
respect to certain voting, transfer and conversion rights.  Subject to the
Lock-Up Agreement, each share of New Class B Stock will be convertible into one
share of New Class A Stock at the option of the holder or, at any time on or
after January 1, 2011, at the option of the disinterested members of the Board
of Directors.
 
New Class B Stock will be subject to significant transfer restrictions.  New
Class A Stock, however, issued upon conversion of the New Class B Stock, will
not be subject to the same restrictions.  Shares of New Class B Stock will at
all times be held only by Authorized Class B Holders, and upon any transfer to a
person or entity other than an Authorized Class B Holder, each share of New
Class B Stock will be automatically converted into one share of New Class A
Stock.  In addition, certain restrictions on conversion and transfer of New
Class B Stock will be set forth in the Lock-Up Agreement.  Shares of the New
Class B Stock will only be issued to Mr. Allen or certain of his affiliates as
described under “The CII Settlement” beginning on page 26.
 
Upon consummation of the Plan, certain holders of New Class A Stock and
securities convertible, exercisable or exchangeable into New Class A Stock and
certain holders of the New CCH II Notes will have their securities registered by
the Reorganized Company or in some circumstances exchanged for registered
securities following the Effective Date.  These registration rights will be
subject to certain customary limitations, including that securities held by
holders of less than 1% of the New Class A Stock shall not be entitled to
registration rights.
 
 Dividend Rights
 
Subject to limitations under Delaware law, preferences that may apply to any
outstanding shares of preferred stock, and contractual restrictions, holders of
each class of New Common Stock are entitled to receive ratably dividends or
other distributions when and if declared by the Board of Directors.  In addition
to such restrictions, whether any future dividends are paid to the Reorganized
Company’s stockholders will depend on decisions that will be made by the Board
of Directors and will depend on then existing conditions, including the Debtors’
financial condition, contractual restrictions, corporate law restrictions,
capital requirements and business prospects.  The ability of the Board of
Directors to declare dividends also will be subject to the rights of any holders
of outstanding shares of the Reorganized Company’s preferred stock, including
the New Preferred Stock, and the availability of sufficient funds under the DGCL
to pay dividends.  For a more complete description of the dividend rights of
holders of shares of  the Reorganized Company’s preferred stock, see “Series A
15% Pay-In-Kind Preferred Stock,” “Blank Check Preferred Stock” and “Liquidation
Preference” below.
 
 Warrants to Purchase New Class A Stock
 
The CIH Settlement Claim Warrants will have an exercise price based on a total
equity value of the Reorganized Company of $5.3 billion and shall expire five
years after the date of issuance.  The CCH Settlement Claim Warrants will have
an exercise price based on a total equity value of the Reorganized Company of
$5.8 billion and shall expire five years after the date of issuance.  The CII
Settlement Claim Warrants will have the terms set forth under “Important Aspects
of the Plan — The CII Settlement.”  The Warrants provide for a cashless exercise
by the Warrant holder. The Warrant exercise price and the number of shares
issuable upon exercise of the Warrants are subject to adjustment upon certain
events including: stock subdivisions, combinations, splits, stock dividends,
capital reorganizations, or capital reclassifications of the New Class A Stock
and in connection with certain distributions of cash, assets or securities.  In
addition, holders of CII Settlement Claim Warrants will have the right to
participate, along with other holders of New Common Stock, in future
below-market offerings of rights to purchase securities (including but not
limited to New Common Stock) on an as-exercised basis.  The Warrants are not
redeemable.
 
 
 
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Series A 15% Pay-In-Kind Preferred Stock
 
Shares of our New Preferred Stock will rank senior as to dividends to shares of
New Common Stock.  For the first four years after the Effective Date, each share
of New Preferred Stock is entitled to an annual dividend at the rate of 15% of
the initial liquidation preference of $1,000 (equivalent to $150 per annum per
share), payable in cash or, at the option of the Reorganized Company, by issuing
additional New Preferred Stock in the amount of the dividend payment, or a
combination of both.  Such dividends will be cumulative and will be payable
semi-annually in arrears on January 15 and July 15 of each year.  The New
Preferred Stock is not convertible or exchangeable at the option of a holder
thereof into any other class or series of stock or obligations of the
Reorganized Company and for the first six months after the Effective Date the
New Preferred Stock may only be redeemed in cash.
 
Thereafter, the Reorganized Company may redeem the New Preferred Stock in whole
or in part at any time upon at least 15 days prior written notice and payment of
100% of the liquidation preference, together with accrued and unpaid dividends
thereon, whether or not declared, which amounts are payable in cash, New Common
Stock or a combination of both.  To the extent any shares of New Preferred Stock
are not redeemed within the four years following the Effective Date, the New
Preferred Stock shall be entitled to an annual dividend as follows: in the fifth
year after the Effective Date, 17%, in the sixth year after the Effective Date,
19%, and in the seventh year after the Effective Date or any time thereafter,
21%.  The terms of the New Preferred Stock require that seven years after the
Effective Date, the Reorganized Company shall redeem the New Preferred Stock at
100% of the liquidation preference, together with accrued and unpaid dividends
thereon, whether or not declared, which amounts are payable in cash, New Common
Stock or a combination of both.  Any redemption payment in New Common Stock may
not exceed 20% of the fully diluted New Common Stock at the time of such
redemption payment.
 
In the event of the Reorganized Company’s voluntary or involuntary liquidation,
winding-up, bankruptcy or dissolution, after payment in full of all amounts owed
to the Debtors’ creditors and any stock senior to the New Preferred Stock,
holders of New Preferred Stock will be entitled to receive and to be paid out of
the Reorganized Company’s assets available for distribution to its stockholders,
before any payment or distribution is made to holders of junior stock (including
New Common Stock), a liquidation preference in the amount of $1,000 per share of
New Preferred Stock, plus accumulated and unpaid dividends on the shares to the
payment date of liquidation, winding-up, bankruptcy or dissolution.  If, upon
the Reorganized Company’s voluntary or involuntary liquidation, winding-up,
bankruptcy or dissolution, the amounts payable with respect to the liquidation
preference of the New Preferred Stock and all stock pari passu to the New
Preferred Stock are not paid in full, the holders of the New Preferred Stock and
such pari passu stock will share equally and ratably in any distribution of the
Reorganized Company’s assets in proportion to the full liquidation preference
and accumulated and unpaid dividends to which they are entitled.  In each case,
after the payment in full of all amounts owed to the Debtors’ creditors and all
amounts owed to holders of New Preferred Stock or any other preferred stock
outstanding, the remaining assets of the Reorganized Company will be distributed
ratably to the holders of shares of New Common Stock, treated as a single
class.  The rights, preferences and privileges of holders of shares of New
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of the New Preferred Stock as well as any series of preferred
stock which the Reorganized Company may designate and issue in the future
without stockholder approval.
 
 Blank Check Preferred Stock
 
Under the terms of the Amended and Restated Certificate of Incorporation, the
Board of Directors will be authorized to issue from time to time up to an
aggregate of approximately 250 million shares of additional series of preferred
stock and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each series,
including the dividend rights, dividend rates, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), redemption
price or prices, liquidation preferences and the number of shares constituting
any series.  These additional shares may be used for a variety of corporate
purposes, including future public offerings, to raise additional capital or to
facilitate acquisitions.  If the Board of Directors decides to issue shares to
persons supportive of current management, this could render more difficult or
discourage an attempt to obtain control of the company by means of a merger,
tender offer, proxy contest or otherwise.  Authorized but unissued shares also
could be used to dilute the stock ownership of persons seeking to obtain control
of the Reorganized Company.
 
 
 
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Transfer Agent and Registrar
 
The transfer agent and registrar for the Reorganized Company’s New Class A Stock
will be determined prior to the Effective Date of the Plan.
 
 Limitations on Liability and Indemnification of Directors and Officers
 
The DGCL authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their stockholders for monetary damages for
breaches of directors’ fiduciary duties.  The Amended and Restated Certificate
of Incorporation limits the liability of directors to the fullest extent
permitted by the DGCL.  In addition, the Reorganized Company’s bylaws provide
that the Reorganized Company must indemnify its directors and officers to the
fullest extent permitted by the DGCL.  The Amended and Restated Certificate of
Incorporation includes a provision that eliminates the personal liability of
directors to the Reorganized Company or its stockholders for monetary damages
for any breach of fiduciary duty as a director, except to the extent such
exemption from liability or limitation thereof is not permitted under the DGCL
as the same exists or hereafter may be amended.
 
The limitation of liability and indemnification provisions in the Amended and
Restated Certificate of Incorporation and the Reorganized Company’s bylaws may
discourage stockholders from bringing a lawsuit against directors for breach of
their fiduciary duty. These provisions may also have the effect of reducing the
likelihood of derivative litigation against directors and officers, even though
such an action, if successful, might otherwise benefit us and our
stockholders.  In addition, the Reorganized Company may be adversely affected to
the extent we pay the costs of settlement and damage awards against directors
and officers pursuant to these indemnification provisions.
 
The Reorganized Company’s Ownership Upon Emergence
 
Upon emergence, all shares of New Class B Stock will be owned by Mr. Allen and
entities affiliated with Mr. Allen, which will be approximately 2% of the
outstanding New Common Stock and 35% of the voting power of all of the
outstanding New Common Stock.
 
The identity of the owners of the New Class A Stock upon emergence, which will
be approximately 97% of the outstanding New Common Stock (including the impact
of the exchange of reorganized Holdco equity for New Class A Stock by Mr. Allen
and certain of his affiliates) and 65% of the voting power of all of the New
Common Stock, is not determinable at this time because, among other reasons, the
identity of all creditors receiving New Class A Stock is not known.
 
Shares of New Class A Stock will be distributed upon emergence as follows:
 
·  
approximately 19.5% of the New Class A Stock will be distributed to CCH I Notes
Claim Holders; and

 
·  
approximately 80.5% of the New Class A Stock will be sold pursuant to the Rights
Offering.

 
The allocation of New Class A Stock outlined above does not give effect to New
Class A Stock distributable upon exercise of:
 
·  
CIH Warrants (which are exercisable for 5% of that number of shares of New
Common Stock outstanding upon emergence, on a fully-diluted basis);

 
·  
CCH Warrants (which are exercisable for 1% of that number of shares of New
Common Stock outstanding upon emergence, on a fully-diluted basis);

 
·  
CII Settlement Claim Warrants (which are exercisable for 4% of that number of
shares of New Common Stock outstanding upon emergence, on a fully-diluted
basis);

 
·  
the Overallotment Option which is the option to purchase additional shares of
New Class A Stock at the Per Share Purchase Price for approximately 16% of the
shares of New Common Stock to be outstanding upon emergence.

 
 
 
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·  
In addition, the Management Incentive Plan will include, among other things, an
allocation of equity-based awards of New Class A Stock in the amount of 3% of
the shares of  New Class A Stock outstanding on the Effective Date.

 
The parties who have committed to purchase New Class A Stock are affiliates of
the Apollo Management, Crestview Partners, Franklin Templeton, MFC Global,
Oaktree Capital, and Western Asset Management.
 
If the Overallotment Option is exercised, holders of New Common Stock and
Warrants will suffer dilution of their investment due to sales of New Common
Stock Stock at a discount to the valuation used to satisfy Claims.   Issuances
of awards under the Management Incentive Plan may also dilute the investment of
holders of New Class A Stock and Warrants.
 
Summary of Legal Proceedings
 
Because of the size and nature of the Debtors’ business, the Debtors are party
to numerous legal proceedings.  Most of these legal proceedings have arisen in
the ordinary course of the Debtors’ business and involve claims for money
damages.  Whether these claims are or will be liquidated or resolved in the
Bankruptcy Court or in some other jurisdiction depends upon the nature of the
claims and the debt arising therefrom.
 
Following is a summary of certain of the Debtors’ significant legal
proceedings:2
 
 Legal Proceedings in the Bankruptcy Court
 
 Avoidance Actions
 
A number of transactions occurred prior to the Petition Date that may have given
rise to Claims, including preference actions, fraudulent transfer and conveyance
actions, rights of setoff and other Claims or causes of action under sections
510, 544, 547, 548, 549, 550 and/or 553 of the Bankruptcy Code and other
applicable bankruptcy or non-bankruptcy law (collectively, the “Avoidance
Actions”).
 
Pursuant to section 546(a) of the Bankruptcy Code, the statute of limitations
with respect to the commencement of avoidance or recovery actions under sections
544, 545, 547, 548, and 553 of the Bankruptcy Code will expire on March 27,
2011, i.e., two years after the Petition Date.  To date, the Debtors have not
made a determination whether they have any Avoidance Actions to prosecute.  See
“Effect of Confirmation of the Plan,” which begins on page 94.
 
 Challenges to the Plan
 
First Lien Lenders
 
JPMorgan Chase Bank, N.A. (“JPM”) is the administrative agent under the CCO
Credit Facility (in such capacity, the “Administrative Agent”) for the lenders
from time to time party thereto (collectively, the “Lenders”).
 
JPM asserts that the Plan cannot be confirmed and, as a result, should not be
proposed.  Specifically JPM contends the following with respect to the Plan:
 
A.           The Plan Cannot Be Confirmed Because It Fails to Give Effect to the
Cross Acceleration Default.
 
JPM’s Argument
 

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2
This summary is not intended as an exhaustive description of all pending legal
matters or proceedings in which CCI or its Debtor and non-Debtor affiliates are
involved.  Certain legal proceedings may be subject to appeal in or outside the
Bankruptcy Court.  Nothing in this discussion is deemed to be an admission by
CCI or any of its Debtor or non-Debtor affiliates of any liability or
wrongdoing.  Please consult each Debtor’s Schedule of Liabilities and Statement
of Financial Affairs, which were filed with the Bankruptcy Court on [●], 2009,
for additional information.

 
 
 
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Pursuant to the CCO Credit Facility, it is an Event of Default if the
Indebtedness of any Designated Holding Company (“DHC”) is accelerated (among
other events).  The Plan cannot be confirmed because its treatment of the CCO
Credit Facility obligations as unimpaired under Section 1124 of the Bankruptcy
Code assumes that the cross acceleration Event of Default under the CCO Credit
Facility is not enforceable.  However, this Event of Default is enforceable both
as a matter of law and equity because CCO is solvent; all of its creditors will
be paid in full; and there are no overriding bankruptcy policies which would
render cross acceleration unenforceable.  To the contrary, when a debtor is
solvent “the bankruptcy rule is that where there is a contractual provision,
valid under state law…the bankruptcy court will enforce the contractual
provision.”  Gencarelli v. UPS Capital Bus. Credit, 501 F.3d 1, 7 (1st Cir.,
2007) (internal quotation marks and italics omitted) (citing Debentureholders
Protective Comm. of Cont'l Inv. Corp. v. Cont'l Inv. Corp., 679 F.2d 264, 269
(1st Cir. 1982)).  Moreover, because the Plan does not “cure” this Event of
Default, the Debtors cannot satisfy the standards for unimpairment under Section
1124 and thus the Plan cannot be confirmed.
 
The Debtors’ Response
 
In contrast, the Debtors maintain that JPM’s position is inconsistent with the
plain language of Section 1124, which expressly prevents a creditor from
exercising its contractual rights of acceleration.  11 U.S.C. § 1124(2)
(“notwithstanding any contractual provision or applicable law that entitles the
holder of such claim or interest to demand or receive accelerated payment …”);
see also In re Kizzac Mgmt. Corp., 44 B.R. 496, 501 (Bankr. S.D.N.Y. 1984)
(“Although the creditor’s rights arising out of acceleration are in fact
affected by cure and reinstatement, they are deemed unimpaired.”).  Moreover,
Section 1124 also makes plain that ipso facto defaults do not need to be cured
in order for a claim to be unimpaired.  Where a single acceleration clause
cannot bar reinstatement, it follows with equal force that multiple
cross-referencing acceleration clauses cannot do so either.  See, e.g., In re
Mirant Corp., 2005 Bankr. LEXIS 909, at *28 (Bankr. N.D. Tex. 2005) (holding
that affirming cross-defaults to defeat non-impairment of senior claims “would
be inconsistent with the purposes of Chapter 11”).  Thus, Debtors submit that,
contrary to JPM’s assertion, there is in fact an “overriding bankruptcy policy”
that renders cross-acceleration unenforceable: the language and purpose of
Section 1124 itself.
 
B.           Pre-Petition, the Debtors Made Certain Misrepresentations in
Connection With $750 Million of Borrowings That Are Neither Cured Nor Curable by
the Plan.
 
JPM’s Argument
 
On or about October 1, 2008 (if not earlier), at least two of the DHCs, CCH and
CCH I Holdings, LLC (“CIH”), had become unable to pay their debts as they came
due resulting in an Event of Default under the CCO Credit Facility.  This Event
of Default was evidenced by, among other things, the fact that in the fourth
quarter of 2008 the Debtors discontinued their historical practice of paying
interest on CCH’s debt via dividend payments up from CCO.  The Debtors
discontinued their practice because certain of the DHCs had become insolvent or
otherwise financially distressed and laws, such as the Delaware Limited
Liability Company Act, fraudulent transfer laws and fiduciary duty laws,
prohibited such dividends in those circumstances, and those same circumstances
establish that at least CCH and CIH had become unable to pay their debts as they
would become due.
 
From October 2 through November 5, 2008, CCO borrowed funds totaling $750
million from the Lenders in four separate borrowing requests.  Each time CCO
represented under the CCO Credit Facility that no Default or Event of Default
had occurred and was continuing.  These representations were false when made
because, as discussed above, by this time at least CCH and CIH had become unable
to pay their debts as they would become due, and these false representations
gave rise to additional Events of Default.
 
These (and other) Events of Default are set forth in detail in an adversary
proceeding commenced by JPM in the bankruptcy case.  See Complaint, Docket No.
1, Adv. Pro. 09-01132 (JMP) (Bankr. S.D.N.Y. Mar. 27, 2009).  These Events of
Default are continuing and cannot be cured.  Because the Plan does not “cure”
these Events of Default it cannot satisfy the standards for unimpairment under
Section 1124 and thus the Plan cannot be confirmed.
 
The Debtors’ Response
 
As set forth in Debtors’ motion to dismiss JPM’s adversary proceeding, JPM has
not alleged any actual default under the CCO Credit Facility.  JPM does not –
and cannot – allege that the DHCs ever missed a debt
 
 
 
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payment as it became due, and instead attempts to assert the existence of an
obligation that appears nowhere in the CCO Credit Facility.  The CCO Credit
Facility contains no requirement that the Debtors be able to pay their debts “as
they would become due” at an indefinite point in the future, yet JPM’s entire
complaint rests on the faulty premise that Debtors had this
obligation.  Accordingly, Debtors maintain that dismissal of all claims is
appropriate.
 
C.           Consummation of the Plan Would Create a New Event of Default Under
the CCO Credit Facility Because a “Group,” Other Than the Paul Allen Group,
Would Have the Power to Vote More Than 35% of the Ordinary Voting Power.
 
JPM’s Argument
 
Under the CCO Credit Facility, it is an Event of Default if the Paul Allen Group
ceases to have the power, directly or indirectly, to vote or direct the voting
of Equity Interests having at least 35% (determined on a fully diluted basis) of
the ordinary voting power for the management of CCO.  It also is an Event of
Default if a transaction is consummated through which a “person” or “group”
other than the Paul Allen Group has the power to vote or direct the voting of
Equity Interests having more than 35% of the ordinary voting power for the
management of CCO, unless the Paul Allen Group has a greater voting
percentage.  The Securities Exchange Act of 1934 defines a “group” as when two
or more persons agree to act together for the purpose of acquiring, holding,
voting or disposing of equity securities of an issuer.  A group is deemed to
have been formed if persons agree to act “in concert” or “in furtherance of a
common objective,” and their agreement to act together relates to the
acquisition, holding, voting or disposing of equity securities of an
issuer.  See, e.g., Wellman v. Dickinson, 682 F.2d 355, 263 (2d Cir. 1982).
 
The New Class B Stock gives the Paul Allen Group 35% voting control over
CCI.  It does not give the Paul Allen Group voting control over CCO’s equity
shares, but rather that CCO remains under the control of its parent affiliates,
ultimately CCI.  The noteholders constituting the Crossover Committee will
retain the vast majority of the voting interests in CCI.  Consequently, under
the Plan, the majority of CCI’s directors are selected by the noteholders
constituting the Crossover Committee, not the Paul Allen Group.  Under this
structure the Paul Allen Group therefore has no voting control over CCO.
 
In addition, there is ample evidence that that noteholders in these cases
constitute a “group.”  This evidence includes (without limitation):
 
·  
the formation of a self-appointed “Committee” by this group of bondholders;

 
·  
the retention of common counsel to represent the group and each member thereof;

 
·  
the group’s retention of common financial advisors;

 
·  
the commitment to execute, and actual execution, by each group member of
identical Plan Support Agreements and Commitment Letters  incorporating
identical Plan-related term sheets;

 
·  
the group’s commitment to purchase reorganized equity under the Rights Offering;

 
·  
the ability of the majority of the group to bind each member to the
group’s  determination of whether the Plan, Disclosure Statement and
Confirmation Order are acceptable and thus binding on all of the members of that
Committee;

 
·  
the ability of the majority of the group to modify the obligations of individual
Committee members under the Restructuring Agreement and related Term Sheet;

 
·  
the ability of the majority of the group to waive certain deadlines under a
member’s Restructuring Agreement; and

 
·  
the coordination of all group activities with the Allen Entities (thus creating
another group).

 
 
 
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·  
Consequently, the restructuring transactions described in the Plan create new
Events of Default.  The Paul Allen Group has no equity voting power over CCO and
that all of the equity voting control over CCO has been transferred to the
noteholder group.  Because nothing in the Plan “cures” these Events of Default,
the Lenders’ Obligations cannot be rendered unimpaired under the Plan and thus
the Plan cannot be confirmed.

 
The Debtors’ Response
 
No Event of Default has occurred and no “group,” as defined in the CCO Credit
Facility, has been formed.  Even if what Lenders describe could be characterized
as a “change of control” – a characterization that Debtors contest on legal,
factual and contractual grounds – such an alleged change of control would not
render the Lenders’ claims impaired under Section 1124.  Moreover, this alleged
change of control would have no bearing on the Lenders’ rights to receive their
contracted-for interest and principal and thus would not prevent reinstatement
in any event.  See, e.g., In re Orlando Tennis World Dev. Co., 34 B.R. 558, 562
(Bankr. M.D. Fla. 1983).
 
D.           The Plan’s Releases and Injunctions Impair the Lenders.
 
JPM’s Argument
 
The Plan provides that:
 
the Holders of Claims and Interests shall be deemed to provide a full discharge
and release to the Debtor Releasees and their respective property from any and
all Causes of Action, whether known or unknown, whether for tort, contract,
violations of federal or state securities laws or otherwise, arising from or
related in any way to the Debtors, including those in any way related to the
Chapter 11 Cases or the Plan; provided, that the foregoing “Third Party Release”
shall not operate to waive or release any person or Entity (other than a Debtor
Releasee) from any Causes of Action expressly set forth in and preserved by the
Plan, the Plan Supplement or related documents.
 
See the Plan, Article X, E.  In addition, the Plan seeks to permanently enjoin
all entities from commencing or continuing any Cause of Action released or to be
released pursuant to the Plan.  See the Plan, Article X, F.
 
These Plan provisions would release and enjoin the Lenders from prosecuting any
claims or causes of action the Lenders have against the Debtors pursuant to the
CCO Credit Facility.  Section 1124 requires that the Plan preserve all of the
Lenders legal, equitable and contractual rights.  Because the Plan releases and
prevents the Lenders from prosecuting claims they may have arising under the CCO
Credit Facility, the Debtors cannot satisfy the standards for unimpairment under
Section 1124 and thus the Plan cannot be confirmed.
 
The Debtors’ Response
 
The Debtors assert that none of the releases in the Plan affect the Unimpaired
status of one's Claim.
 
E.           The Lenders Appeal Rights Are Preserved Under the Plan and Any
Reversal on Appeal May Give Rise to Plan Defaults and Losses for Non-CCO
Creditors.
 
JPM’s Argument
 
The Plan, if confirmed, would by law preserve all of the Lenders’ legal,
equitable and contractual rights.  See 11 U.S.C § 1124.  The right to appeal is
among the Lenders’ rights the Plan would expressly preserve.  Accordingly, in
the event the Lenders pursue any appeal after confirmation of any adverse ruling
of any of the above issues, the reversal on appeal of such an order would permit
the Lenders to accelerate and demand immediate payment of all Obligations under
the CCO Credit Facility.  If the Obligations are accelerated after the Plan
becomes effective, the consequences and potential economic losses to other
holders of claims against the Debtors, other than CCO, and to those who acquire
interests in reorganized CCI under the Plan, could be material and may give rise
to post consummation Plan defaults.
 
The aggregate principal amount of the Obligations as of the Petition Date is
approximately $8,246,604,237, plus letters of credit in the face amount of
approximately $140,074,350, plus accrued and unpaid interest thereon and fees
and expenses.
 
 
 
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The Debtors’ Response
 
Contrary to the Lenders’ assertion, the Debtors note that Section 1124 does not
require preservation of all legal, equitable and contractual rights in order for
a claim or interest to be unimpaired.  It contemplates only those “legal,
equitable and contractual rights to which such claim or interest entitles the
holder of such claim or interest.”  11 U.S.C. §§ 1124(1); 1124(2)(E).  Here, the
Lenders’ claims and interests in the bankruptcy estate do not “entitle” them to
a “right to appeal.”  Any “right to appeal” arises from and depends on the
procedural posture of pending litigation, not as an entitlement inherent in the
Lenders’ contractual claims and interests.  Moreover, no “right to appeal” has
been limited here, as the Lenders are still free to file whatever legal papers
they choose.  By the Lenders’ expansive interpretation of that “right,”
reinstatement under Section 1124 would never be viable because a creditor could
always argue that it intended to appeal the confirmation order and might have a
chance of winning.  Such an interpretation would render Section 1124
meaningless.
 
The First Lien Lender Group
 
The foregoing contentions of JPM are also supported by an unofficial group of
unaffiliated Lenders (the “First Lien Lender Group”) holding approximately $2.0
billion of indebtedness under the Credit Agreement.  The First Lien Lender Group
is comprised of the Lenders listed in the Verified Statement of Kramer Levin
Naftalis & Frankel LLP Pursuant to Rule 2019 of the Federal Rules of Bankruptcy
Procedure, Dkt. No. 168, as amended from time to time.
 
First Lien Lender’s Argument
 
In addition to joining in the contentions of JPM, the First Lien Lender Group
asserts that the Plan cannot be confirmed due to the existence of certain other
defaults under the Credit Agreement.
 
The First Lien Lender Group filed an objection to the Disclosure Statement (see
Dkt. No. 248) contending, inter alia, that the Plan is unconfirmable on its face
and that approval of the Disclosure Statement should be deferred pending
judicial determination of the foregoing issues, among others.
 
The First Lien Lender Group also asserts that the Debtors’ failure to disclose
the identities of the directors that are to serve on the board of directors of
reorganized CCI gives rise to the possibility that the composition of the board
of directors, when it is finally revealed, may result in additional defaults
under the Credit Agreement.  The Credit Agreement provides that it shall be a
default if a majority of the members of CCI’s board of directors cease to be
“Continuing Directors,” i.e., directors who were members of the board of
directors of CCI on the date certain indebtedness was issued or directors who
were nominated or elected with the approval of a majority of the “Continuing
Directors.”  Without knowing the identity of the proposed directors of
reorganized CCI, it is impossible to evaluate the Debtors’ compliance with the
“Continuing Directors” mandate.  Moreover, the identity of the proposed
directors of reorganized CCI, as well as the process that was used to select
such directors, the business affiliations of such directors, and any
relationships between such directors and the members of Crossover Committee,
among other things, are all factors that are relevant to the existence of the
defaults raised by JPM that are discussed above.
 
The Debtor’s Response
 
The Debtors maintain that there are no defaults under the CCO Credit Facility
that make the Plan unconfirmable, and that no basis exists for deferring
approval of this Disclosure Statement.
 
Second and Third Lien Lenders
 
Second and Third Lien Lenders’ Argument
 
Wilmington Trust Company, as indenture trustee on behalf of the holders of the
CCO Notes (the “Second Lien Indenture Trustee”), and Wells Fargo Bank, N.A., in
its capacities as successor Administrative Agent and Successor Collateral Agent
(collectively, the “Third Lien Agent”), for the third lien prepetition secured
lenders under the CCOH Credit Facility, contend that  if, as the First Lien
Lenders allege above, the Debtors are unable to reinstate the claims arising
under the CCO Credit Facility, the Debtors will also be unable to reinstate the
claims
 
 
 
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arising under the CCO Notes and the CCOH Credit Facility.  Moreover, the Second
Lien Indenture Trustee and Third Lien Agent believe that the restructuring
proposed in the Plan will constitute a “Change of Control” as that term is
defined in the indentures governing the CCO Credit Facility and the CCO Notes,
which will entitle the holders of the CCO Notes and the secured lenders under
the CCOH Credit Facility to demand immediate repayment of their claims in
accordance with the terms of the CCO Notes and the CCOH Credit
Facility.  Finally, the Second Lien Indenture Trustee and the Third Lien Agent
also contend that the releases and exculpations granted under the Plan may
prevent reinstatement of the CCO Notes and the CCOH Credit Facility and are
otherwise invalid under controlling Second Circuit authorities.
 
The Debtor’s Response
 
In response, Debtors note that whether or not one claim is unimpaired should
have no bearing on the impairment of another claim; the reinstatement analysis
under Section 1124 will be conducted independently for each set of claims and
interests.  Moreover, even if what Lenders describe could be characterized as a
“change of control” – a characterization that Debtors contest on legal, factual
and contractual grounds – such an alleged change of control would not render the
Lenders’ claims impaired under Section 1124.  Moreover, this alleged change of
control event would have no bearing on the Lenders’ rights to receive their
contracted-for interest and principal and thus would not prevent reinstatement
in any event.  See, e.g., In re Orlando Tennis World Dev. Co., 34 B.R. 558, 562
(Bankr. M.D. Fla. 1983).  Finally, the Debtors dispute on a variety of grounds
that any of the releases in the Plan affects the Unimpaired status of one's
Claim.
 
 Pending Legal Proceedings outside the Bankruptcy Court
 
Through the Petition Date, the Debtors were involved in the following material
legal proceedings.  The Debtors are vigorously defending themselves in each of
these matters.  The proceedings set forth below are stayed under the automatic
stay provisions of section 362 of the Bankruptcy Code.  Claims arising from
these proceedings will be treated in accordance with the Plan.
 
 Patent Litigation
 
Ronald A. Katz Technology Licensing, L.P. v. Charter Communications, Inc. et.
al.  On September 5, 2006, Ronald A. Katz Technology Licensing, L.P. served a
lawsuit on CCI, CCHC, CCO, and Charter Communications Entertainment LLC, and a
group of other companies, in the U.S. District Court for the District of
Delaware alleging that CCI and the other defendants have infringed its
interactive telephone patents.  The Charter entities denied the allegations
raised in the complaint.  On March 20, 2007, the Judicial Panel on
Multi-District Litigation transferred this case, along with 24 others, to the
U.S. District Court for the Central District of California for coordinated and
consolidated pretrial proceedings.  is The Charter entities are vigorously
contesting this matter.
 
Rembrandt Patent Litigation.  On June 1, 2006, Rembrandt Technologies, LP sued
CCI, CCO, and several other cable companies in the U.S. District Court for the
Eastern District of Texas, alleging that each defendant’s high-speed data
service infringes three patents owned by Rembrandt and that CCI’s and CCO’s
receipt and retransmission of ATSC digital terrestrial broadcast signals
infringes a fourth patent owned by Rembrandt (Rembrandt I).  On November 30,
2006, Rembrandt Technologies, LP again filed suit against CCI, CCO, and another
cable company in the U.S. District Court for the Eastern District of Texas,
alleging patent infringement of an additional five patents allegedly related to
high-speed Internet over cable (Rembrandt II).  CCI and CCO have denied all of
Rembrandt’s allegations. On June 18, 2007, the Rembrandt I and Rembrandt II
cases were combined in a multi-district litigation proceeding in the U.S.
District Court for the District of Delaware. On November 21, 2007, certain
vendors of the equipment that is the subject of Rembrandt I and Rembrandt II
cases filed an action against Rembrandt in U.S. District Court for the District
of Delaware seeking a declaration of non-infringement and invalidity on all but
one of the patents at issue in those cases.  On January 16, 2008 Rembrandt filed
an answer in that case and a third party counterclaim against CCI, CCO, and the
other multiple system operators for infringement of all but one of the patents
already at issue in Rembrandt I and Rembrandt II cases.  On February 7, 2008,
CCI and CCO answered  Rembrandt’s counterclaims and added a counter-counterclaim
against Rembrandt for a declaration of non-infringement on the remaining
patent.  CCI and CCO are vigorously contesting the Rembrandt I and Rembrandt II
cases.
 
 
 
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Verizon Patent Litigation. On February 5, 2008, four Verizon entities sued CCI
and two other CCI subsidiaries in the U.S. District Court for the Eastern
District of Texas, alleging that the provision of telephone service by CCI
infringes eight patents owned by the Verizon entities (Verizon I).  A trial is
scheduled for February 2010.  On December 31, 2008, forty-four of the Debtors
filed a complaint in the U.S. District Court for the Eastern District of
Virginia alleging that Verizon and two of its subsidiaries infringe four patents
related to television transmission technology (Verizon II).  On February 6,
2009, Verizon responded to the complaint by denying the Debtors’ allegations,
asserting counterclaims for non-infringement and invalidity of Debtors’ patents
and asserting counterclaims against CCI for infringement of eight patents.  On
January 15, 2009, CCI filed a complaint in the U.S. District Court for the
Southern District of New York seeking a declaration of non-infringement on two
patents owned by Verizon (Verizon III).  The Debtors are vigorously contesting
the allegations made against it in Verizon I and Verizon II.
 
We are also a defendant or co-defendant in several other unrelated lawsuits
claiming infringement of various patents relating to various aspects of our
businesses.  Other industry participants are also defendants in certain of these
cases, and, in many cases including those described above, we expect that any
potential liability would be the responsibility of our equipment vendors
pursuant to applicable contractual indemnification provisions.
 
In the event that a court ultimately determines that we infringe on any
intellectual property rights, we may be subject to substantial damages and/or an
injunction that could require us or our vendors to modify certain products and
services we offer to our subscribers, as well as negotiate royalty or license
agreements with respect to the patents at issue.  While we believe the lawsuits
are without merit and intend to defend the actions vigorously, all of these
patent lawsuits could be material to our consolidated results of operations of
any one period, and no assurance can be given that any adverse outcome would not
be material to our consolidated financial condition, results of operations, or
liquidity.
 
 Employment Litigation
 
Marc Goodell v. Charter Communications, LLC and Charter Communications, Inc.  On
August 28, 2008, plaintiff filed a complaint against Charter Communications, LLC
(“CC LLC”) and CCI in the United States District Court for the Western District
of Wisconsin.  The complaint subsequently was amended on or about October 31,
2008, and again on January 7, 2009, to reduce the scope of the claims asserted
and add four additional plaintiffs.  In their Second Amended Complaint,
Plaintiffs seek to represent a class of current and former broadband, system,
and other types of technicians who are or were employed by CC LLC or CCI in
Michigan, Minnesota, Missouri or California.  They allege that CC LLC and CCI
violated certain wage and hour statutes of those four states by failing to pay
technicians for all hours worked.  CC LLC and CCI have answered the second
amended complaint, asserting a variety of defenses.  By stipulation, the parties
jointly moved the district court to stay the proceedings in this action on or
about in February 20, 2009 in response to CCI’s announced intention to make a
bankruptcy filing.  On February 23, 2009, the district court, sua sponte, issued
an order dismissing the lawsuit without prejudice.  The district court reserved
the right to vacate the order upon request  by either party and further
indicated that the matter would be reinstated under a number of conditions,
including CCI’s emergence from bankruptcy if the claims were not disposed of in
the bankruptcy case.  Plaintiff moved the district court to vacate its dismissal
order on March 12, 2009, arguing that the dismissal would be prejudicial to the
putative class members.  On March 31, 2009, the district court entered an order,
vacating its prior order, reinstating the action and staying it.  Although CC
LLC and CCI question the authority of the district court to modify its dismissal
order after CCI filed for bankruptcy, neither party nor the district court has
raised that issue.  CC LLC and CCI continue to deny all liability, believe that
they have substantial defenses and intend, if and when the action resumes active
litigation, to contest the claims asserted there vigorously.  We have been
subjected, in the normal course of business, to the assertion of other similar
claims and could be subjected to additional such claims.  We cannot predict the
ultimate outcome of any such claims.
 
 Other Proceedings
 
Gerald Paul Bodet, Jr. v. Charter Communications, Inc. and Charter
Communications Holding Company, LLC.  On or about March 16, 2009, plaintiff
filed, but did not serve, a class action against CCI and Holdco, alleging
violations of the Sherman Act and Louisiana Unfair Trade Practices Act for
allegedly tying the provision of premium cable programming to the purchase or
rental of a set top box from CCI and Holdco.  We understand similar claims have
been made against other multiple system cable operators.  At the appropriate
time, CCI and Holdco
 
 
 
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intend to deny any liability, are advised that they have substantial defenses,
and intend to vigorously defend this case.
 
We also are party to other lawsuits and claims that arise in the ordinary course
of conducting our business.  The ultimate outcome of these other legal matters
pending against us or our subsidiaries cannot be predicted, and although such
lawsuits and claims are not expected individually to have a material adverse
effect on our consolidated financial condition, results of operations, or
liquidity, such lawsuits could have in the aggregate a material adverse effect
on our consolidated financial condition, results of operations, or
liquidity.  Whether or not we ultimately prevail in any particular lawsuit or
claim, litigation can be time consuming and costly and injure our reputation.
 
Projected Financial Information
 
Attached as Exhibit C is consolidated projected financial statement information,
including consolidated balance sheets, consolidated income statements and
consolidated statements of cash flows (together, the “Projections”) for the
period from January 1, 2009 through December 31, 2013 (the “Projection
Period”).  The Projections assume an Effective Date of September 30, 2009.
 
The Projections have been prepared by the Debtors’ management.  Such Projections
were not prepared to comply with the guidelines for prospective financial
statements published by the American Institute of Certified Public Accountants
and the rules and regulations of the United States Securities and Exchange
Commission.  The Debtors relied upon the accuracy and completeness of publicly
available information, and portions of the information herein may be based upon
certain statements, estimates and forecasts provided by third parties with
respect to the anticipated future performance of the Reorganized Company.  The
Debtors did not attempt independently to audit or verify such
information.  Further, the Debtors’ independent accountants have neither
examined nor compiled the accompanying actual results and projections and,
accordingly, do not express an opinion or any other form of assurance with
respect to the Projections, assume no responsibility for the Projections and
disclaim any association with the projections.  Except for purposes of this
disclosure statement, the Debtors do not publish projections of their
anticipated financial position or results of operations.
 
The Projections contain certain statements that are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of
1995.  These statements are subject to a number of assumptions, risks, and
uncertainties, many of which are and will be beyond the control of the
Reorganized Company, including the implementation of the Plan, the continuing
availability of sufficient borrowing capacity or other financing to fund  future
principal payments of debt, existing and future governmental regulations and
actions of government bodies, natural disasters and unusual weather conditions
and other market and competitive conditions.  Holders of Claims and Interests
are cautioned that the forward-looking statements speak as of the date made and
are not guarantees of future performance.  Actual results or developments may
differ materially from the expectations expressed or implied in the
forward-looking statements, and the Debtors and the Reorganized Company
undertake no obligation to update any such statements.
 
The Projections, while presented with numerical specificity, are necessarily
based on a variety of estimates and assumptions which, though considered
reasonable by the Debtors, may not be realized and are inherently subject to
significant business, economic, competitive, industry, regulatory, market and
financial uncertainties and contingencies, many of which are and will be beyond
the Reorganized Company’s control.  The Debtors caution that no representations
can be made or are made as to the accuracy of the historical financial
information or the Projections or to the Reorganized Company’s ability to
achieve the projected results.  Some assumptions may prove to be
inaccurate.  Moreover, events and circumstances occurring subsequent to the date
on which the Projections were prepared may be different from those assumed, or,
alternatively, may have been unanticipated, and thus the occurrence of these
events may affect financial results in a materially adverse or materially
beneficial manner.  The Debtors and the Reorganized Company do not intend and
undertake no obligation to update or otherwise revise the Projections to reflect
events or circumstances existing or arising after the date this Disclosure
Statement is initially filed or to reflect the occurrence of unanticipated
events.  The projections, therefore, may not be relied upon as a guaranty or
other assurance of the actual results that will occur.  In deciding whether to
vote to accept or reject the Plan, holders of Claims or Interests must make
their own determinations as to the reasonableness of such assumptions and the
reliability of the Projections.
 
 
 
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Creditors and other interested parties should see the section entitled “Risk
Factors” of this Disclosure Statement for a discussion of certain factors that
may affect the future financial performance of the Reorganized Debtors.
 
The Projections make certain assumptions regarding, among other things, the
growth of the Debtors’ subscriber base, the Debtors’ penetration into the
telephone market, the growth in their sales of bundled cable, internet and
telephone services, the proportion of the Debtors’ revenue growth derived from
their video-on-demand and digital video recorder services and the proportion of
the Debtors’ revenue growth derived from their telephone and high-speed Internet
services.  Moreover, the Projections have been prepared based on assumption that
the Effective Date of the Plan is September 30, 2009 and assume the successful
implementation of the Reorganized Company’s business plan.  Although the Debtors
presently intend to cause the Effective Date to occur as soon as practical
following confirmation of the Plan, there can be no assurance as to when the
Effective Date will actually occur given the conditions for the Effective Date
to occur pursuant to the terms of the Plan.
 
The Projections are based on, among other things: (a) current and projected
market conditions in each of the Reorganized Company’s respective markets; (b)
the ability to maintain sufficient working capital to fund operations; and (c)
confirmation of the Plan.
 
Risk Factors
 
Before voting on the Plan, holders of Claims and Interests should read and
consider carefully the risk factors set forth below, as well as the other
information set forth in this Disclosure Statement and the documents delivered
together herewith, referred to or incorporated by reference herein, including
the Risk Factors set forth in our Annual Report on Form 10-K, prior to voting to
accept or reject the Plan.  Although these risk factors are many, these factors
should not be regarded as constituting the only risks present in connection with
the Debtors’ businesses or the Plan and its implementation.
 
 Risks Relating to Bankruptcy
 
 Debtors May Not Be Able to Obtain Confirmation of the Plan
 
To emerge successfully from Chapter 11 bankruptcy protection as a viable entity,
the Debtors, like any debtor, must obtain approval of a plan of reorganization
from their creditors, confirmation of the plan through the Bankruptcy Court and
successfully implement this confirmed plan.  The foregoing process requires the
Debtors to (a) meet certain statutory requirements with respect to the adequacy
of disclosure with respect to any proposed plan, (b) solicit and obtain creditor
acceptances of the proposed plan and (c) fulfill other statutory conditions with
respect to plan confirmation.
 
With regard to any proposed plan of reorganization, the Debtors may not receive
the requisite acceptances to confirm a plan. If the requisite acceptances of the
Plan are received, the Debtors intend to seek Confirmation of the Plan by the
Bankruptcy Court.  If the requisite acceptances are not received, the Debtors
may nevertheless seek Confirmation of the Plan notwithstanding the dissent of
certain Classes of Claims. The Bankruptcy Court may confirm the Plan pursuant to
the “cramdown” provisions of the Bankruptcy Code, which allow the Bankruptcy
Court to confirm a plan that has been rejected by an impaired class of Claims if
it determines that the plan satisfies section 1129(b) of the Bankruptcy
Code.  In order to confirm a plan against a dissenting class, the Bankruptcy
Court also must find that at least one impaired class has accepted the plan,
with such acceptance being determined without including the acceptance of any
“insider” in such class.
 
The Debtors will seek under the Plan to reinstate and render unimpaired certain
classes of Claims based on notes and credit facilities pursuant to section 1124
of the Bankruptcy Code.  The creditor banks and/or other interested parties are
expected to challenge reinstatement and unimpairment.  In particular, the
Administrative Agent has commenced an adversary proceeding seeking a declaratory
judgment that certain defaults and events of default have occurred and are
continuing under the CCO Credit Facility.  The Administrative Agent contends
that the alleged existence of such defaults and events of default prevent
reinstatement of the claims arising under the CCO Credit Facility.  The
contentions of JPM are also supported by the First Lien Lender Group.  In
addition to joining in the contentions of the Administrative Agent, the First
Lien Lender Group believes that the Plan cannot be confirmed due to the
existence of certain other defaults under the CCO Credit Facility.  The
Indenture Trustee and the CCOH
 
 
 
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Administrative Agent contend that, as a result of certain cross acceleration
clauses contained in the indentures governing the CCO Notes and in the CCOH
Credit Facility, the Debtors’ inability to reinstate the claims arising under
the CCO Credit Facility will also result in the Debtors’ inability to reinstate
the claims arising under the CCO Notes and the CCOH Credit Facility.  The
Administrative Agent, the First Lien Lender Group, the Indenture Trustee and the
CCOH Administrative Agent contend that  a Change of Control as defined in the
CCO Credit Facility, the indenture governing the CCO Notes, and other documents,
may occur, thus creating further defaults under the CCO Credit Facility and the
CCOH Credit Facility, accelerating the debt under the CCO Credit Facility and
entitling the holders of the CCO Notes and the lenders under the CCOH Credit
Facility to demand immediate repayment of their claims in accordance with the
terms of the CCO Notes and the CCOH Credit Facility.  The First Lien Lender
Group, the CCOH Administrative Agent and the Indenture Trustee also contend that
the releases and exculpations granted under the Plan may prevent reinstatement
of the CCO Credit Facility, the CCO Notes and the CCOH Credit Facility, and are
otherwise invalid.  Because the Plan is contingent on reinstatement and
unimpairment, failure to reinstate the credit facilities, indentures and certain
notes would require the Debtors to revise or abandon the Plan.  Moreover, if
reinstatement and unimpairment does not occur and current capital market
conditions persist, the Debtors may not be able to secure adequate new financing
and the cost of any such new financing would likely be materially higher.
 
Even if the requisite acceptances of a proposed plan are received, the
Bankruptcy Court may not confirm the plan as proposed.  A dissenting Holder of a
claim against the Debtors could challenge the balloting procedures and results
as not being in compliance with the Bankruptcy Code.  Finally, even if the
Bankruptcy Court determined that the balloting procedures and results were
appropriate, the Bankruptcy Court could still decline to confirm a proposed plan
if it found that any of the statutory requirements for confirmation had not been
met.  Specifically, section 1129 of the Bankruptcy Code sets forth the
requirements for confirmation and requires, among other things, a finding by the
Bankruptcy Court that (a) the debtor’s plan “does not unfairly discriminate” and
is “fair and equitable” with respect to any non-accepting classes, (b)
confirmation of the debtor’s plan is not likely to be followed by a liquidation
or a need for further financial reorganization and (c) the value of
distributions to non-accepting Holders of Claims within a particular class under
the debtor’s plan will not be less than the value of distributions such Holders
would receive if the debtor was liquidated under Chapter 7 of the Bankruptcy
Code.  The Bankruptcy Court may determine that a proposed plan does not satisfy
one or more of these requirements, in which case the proposed plan would not be
confirmed by the Bankruptcy Court.
 
If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether the
Debtors would be able to reorganize their businesses and what, if any,
distributions Holders of Claims against or Holders of the Debtors’ common stock
or other equity interests ultimately would receive with respect to their Claims
or equity interests. There also can be no assurance that the Debtors will be
able to successfully develop, prosecute, confirm, and consummate an alternative
plan of reorganization with respect to the Chapter 11 Cases that is acceptable
to the Bankruptcy Court and the Debtors’ creditors, equityholders and other
parties in interest. Additionally, it is possible that third parties may seek
and obtain approval to terminate or shorten the exclusivity period during which
only the Debtors may propose and confirm a plan of reorganization. Finally, the
Debtors’ emergence from bankruptcy is not assured. While the Debtors expect to
emerge from bankruptcy in the future, there can be no assurance that the Debtors
will successfully reorganize or when this reorganization will occur.
 
 The conditions precedent to the Effective Date of the Plan may not occur.
 
As more fully set forth in Exhibit A, the Effective Date is subject to a number
of conditions precedent.  If such conditions precedent are not met or waived,
the Effective Date will not take place.
 
 Historical financial information of the Debtors may not be comparable to the
financial information of the Reorganized Debtors.
 
As a result of the consummation of the Plan and the transactions contemplated
thereby, the financial condition and results of operations of the Reorganized
Debtors from and after the Effective Date may not be comparable to the financial
condition or results of operations reflected in the Debtors’ historical
financial statements.
 
 
 
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The Debtors may not be able to achieve their projected financial results.
 
The financial projections set forth on Exhibit C to this Disclosure Statement
represent the Debtors’ management’s best estimate of the Debtors’ future
financial performance based on currently known facts and assumptions about the
Debtors’ future operations as well as the U.S. and world economy in general and
the industry segments in which the Debtors operate in particular.  The Debtors’
actual financial results may differ significantly from the projections.  If the
Debtors do not achieve their projected financial results, the trading prices of
the New Common Stock may be negatively affected and the Debtors may lack
sufficient liquidity to continue operating as planned after the Effective Date.
 
 The Plan Support Agreements may terminate.
 
Pursuant to the Plan Support Agreements, the Committed Parties have agreed to
support the Plan; subject, however to certain termination events not having
occurred, including, without limitation:
 
·  
CCI’s board of directors shall have been advised in writing by its outside
counsel that continued pursuit of the Plan is inconsistent with its fiduciary
duties because, and the board of directors determines in good faith that, (A) a
proposal or offer from a third party is reasonably likely to be more favorable
to the Debtors than is proposed under the Plan, taking into account, among other
factors, the identity of the third party, the likelihood that any such proposal
or offer will be negotiated to finality within a reasonable time, and the
potential loss to the company if the proposal or offer were not accepted and
consummated, or (B) the Plan is no longer confirmable or feasible;

 
·  
the Plan or any subsequent plan filed by the Debtors with the Bankruptcy Court
(or a plan supported or endorsed by the Debtors) is not reasonably consistent in
all material respects with the terms of the Plan Support Agreements;

 
·  
a disclosure statement order reasonably acceptable to the Debtors, the holders
of a majority of the CCH I Notes held by the Crossover Committee (the “Requisite
Holders”) and Mr. Allen has not been entered by the bankruptcy court on or
before the 50th day following the Petition Date;

 
·  
a confirmation order reasonably acceptable to the Debtors, the Requisite Holders
and Mr. Allen is not entered by the bankruptcy court on or before the 130th day
following the Petition Date;

 
·  
the Effective Date shall not have occurred on or before the 150th day following
the Petition Date, or before December 15, 2009 in the case that certain
consents, approvals or waivers required to be obtained from governmental
authorities have not been obtained on or before the 150th day following the
Petition Date, and all other conditions precedent to the Effective Date shall
have been satisfied before the 150th day following the Petition Date or waived
by the Requisite Holders (other than those conditions that by their nature are
to be satisfied on the Effective Date);

 
·  
any of the Chapter 11 cases of the Debtors is converted to cases under Chapter 7
of the Bankruptcy Code if as a result of such conversion the Plan is not
confirmable;

 
·  
the Bankruptcy Court enters an order in any of the Chapter 11 Cases appointing
(i) a trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code, (ii) a
responsible officer or (iii) an examiner, in each case with enlarged powers
relating to the operation of the business (powers beyond those set forth in
subclauses (3) and (4) of section 1106(a)) under section 1106(b) of the
Bankruptcy Code;

 
·  
any of the Chapter 11 cases of the Debtors is dismissed if as a result of such
dismissal the Plan is not confirmable;

 
·  
the order confirming the Plan is reversed on appeal or vacated;

 
·  
any party breaches any material provision of the Plan Support Agreements or the
Plan and any such breach has not been duly waived or cured after a period of
five days;

 
 
 
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·  
CCI withdraws the Plan or publicly announces its intention not to support the
Plan; and

 
·  
any Plan Support Agreement or the separate restructuring agreement among CCI,
Mr. Allen and CII has terminated or been breached in any material respect,
subject to notice and cure provisions.

 
To the extent the terms or conditions of the Plan Support Agreements are not
satisfied, or to the extent events of termination arise under the Plan Support
Agreements, the Plan Support Agreements may terminate prior to the confirmation
or consummation of the Plan, which could result in the loss of support for the
Plan by important creditor constituents.  Any such loss of support could
adversely effect the Debtors’ ability to confirm and consummate the Plan.
 
 A liquid trading market for New Common Stock may not develop.
 
As of the Effective Date, New Class A Stock will not be listed for trading on
any stock exchange or trading system, however, the Reorganized Company will
cause New Class A Stock to be listed on the NASDAQ Global Select Market within
the timeframe specified in the Plan.  Consequently, the near-term trading
liquidity of the New Class A Stock will be limited.  The future liquidity of the
trading market for New Class A Stock will depend on, among other things, the
number of holders of New Class A Stock, whether the stock is listed for trading
on an exchange, and whether the Reorganized Company continues to be a public
reporting company following the Effective Date.
 
 Certain holders of Claims may acquire a substantial amount of New Common Stock
upon consummation of the Plan.
 
During the Chapter 11 Cases, there is no limitation on the trading of Claims,
except the requirement under the Plan Support Agreements that any transferee of
Claims agrees to become bound by the transferor’s Plan Support
Agreement.  Accordingly, upon consummation of the Plan, certain holders of
Claims are likely to receive distributions of the New Common Stock representing
a substantial amount of the outstanding shares of the New Common Stock.  In
addition, certain holders of Claims may already hold a sufficiently sizeable
position that they may receive a distribution of a significant percentage of the
New Common Stock, and thus could be in a position to influence the outcome of
actions requiring stockholder approval, including, among other things, election
of directors (subject to the Voting Threshold).  This concentration of ownership
could also facilitate or hinder a negotiated change of control of the
Reorganized Company and, consequently, impact the value of the New Common
Stock.  Furthermore, the possibility that one or more holders of a significant
number of shares of New Common Stock may sell all or a large portion of its
shares of New Common Stock in a short period of time may adversely affect the
trading prices of the New Common Stock.
 
 Holders of New Class A Stock may be diluted by the Overallotment Option
 
Committed Parties who have committed to participate in the Excess Backstop for
the Rights Offering will be offered, under certain conditions, the option to
purchase additional shares of New Class A Stock, at a 25% discount to the net
Plan Value per share of the Reorganized Company upon its emergence from
bankruptcy.  If exercised, holders of New Class A Stock will suffer dilution of
their investment due to sales of New Class A Stock at a discount to the
valuation used to satisfy Claims.
 
 Certain tax consequences of the Debtors’ Plan raise unsettled and complex legal
issues and involve various factual determinations.
 
Some of the material consequences of the Plan regarding U.S. federal income
taxes are summarized under “Certain U.S. Federal Income Tax Consequences of the
Plan.”  Many of these tax issues raise unsettled and complex legal issues, and
also involve various factual determinations, such as valuations, that raise
additional uncertainties.  No ruling from the U.S. Internal Revenue Service
(“IRS”) has been or will be sought by the Debtors regarding most of the tax
consequences described in this Disclosure Statement, except as described in
“Certain U.S. Federal Income Tax Consequences of the Plan.”  The IRS may
challenge the various positions the Debtors have taken, or intend to take, with
respect to their tax treatment, and a court may sustain such a challenge or
objection by the IRS.  For a more detailed discussion of risks relating to the
specific positions the Debtors intend to take with respect to various tax
issues, please review “Certain U.S. Federal Income Tax Consequences of the
Plan,” which begins on page 102.
 
 
 
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The “ownership change” caused by the restructuring of the Debtors will result in
a limitation on or a loss of the net operating losses.
 
As of December 31, 2008, the Debtors have approximately $8.7 billion of federal
tax net operating losses, resulting in a gross deferred tax asset of
approximately $3.1 billion, expiring in the years 2009 through 2028.  In
addition, the Debtors have state tax net operating losses, resulting in a gross
deferred tax asset (net of federal tax benefit) of approximately $325 million,
generally expiring in years 2009 through 2028.   Currently, such tax net
operating losses can accumulate and be used to offset most of the Debtor’s
expected future taxable income.  However, as further described in this
Disclosure Statement, the issuance under the Plan of the New Common Stock, along
with the cancellation of existing equity interests through the Plan, is expected
to cause an “ownership change” of CCI as of the Effective Date.  As a result,
Section 382 of the IRC will limit CCI’s use of its net operating losses after
the Effective Date.  We cannot assure you that the limitation on the Reorganized
Company’s ability to use its net operating losses will not have a material
adverse effect on its financial condition and results of operations.  For a more
detailed discussion of limitations on or loss of the net operating losses,
please review “Certain U.S. Federal Income Tax Consequences Of The Plan —
Certain U.S. Federal Income Tax Consequences to Reorganized Debtors — Limitation
of Net Operating Loss Carryforwards and Other Tax Attributes,” which begins on
page 103.
 
 The Reorganized Company’s charter and bylaws could deter takeover attempts that
some shareholder may consider desirable, which could adversely affect the price
of the New Common Stock.
 
Various provisions of the Reorganized Company’s Amended and Restated Certificate
of Incorporation and amended and restated bylaws, and Delaware law, could make
acquiring control of the Reorganized Company without the requisite support of
its Board of Directors difficult for a third party, even if the change of
control would be beneficial to a recipient of New Common Stock.  The existence
of these provisions could deprive certain recipients of New Common Stock of an
opportunity to sell their shares of New Common Stock at a premium over the
prevailing market price.  The potential inability of holders of New Common Stock
to obtain a control premium could, in certain instances, depress any future
trading prices of New Common Stock.
 
 Risks Related to the Debtors’ Significant Indebtedness
 
The Debtors will have significant indebtedness upon their emergence from
bankruptcy.
 
Upon emergence from bankruptcy, the Debtors will have a significant amount of
indebtedness.  This could have important consequences, including the following:
 
·  
we will have to dedicate a significant portion of our cash flow to making
interest and principal payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital expenditures,
acquisitions or other general corporate purposes;

 
·  
the post-emergence levels of indebtedness may make us less attractive to
potential acquirers or acquisition targets;

 
·  
the post-emergence levels of indebtedness may limit our flexibility to adjust to
changing business and market conditions, and make us more vulnerable to a
downturn in general economic conditions as compared to competitors that may be
less leveraged;

 
·  
the post-emergence levels of indebtedness may make us vulnerable to interest
rate increases, because a substantial amount of our borrowings will be subject
to variable rates of interest;

 
·  
the post-emergence levels of indebtedness may adversely affect our relationship
with customers and suppliers;

 
·  
the post-emergence levels of indebtedness may limit our ability to borrow
additional funds in the future, or to access financing at the necessary level of
the capital structure, due to applicable financial and restrictive covenants in
our debt;

 
 
 
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·  
the post-emergence levels of indebtedness may make it difficult for us to
satisfy our obligations to the holders of our notes and for our subsidiaries to
satisfy their obligations to the lenders under their credit facilities and to
their noteholders; and

 
·  
the post-emergence levels of indebtedness may limit future increases in the
value, or cause a decline in the value of our equity, which could limit our
ability to raise additional capital by issuing equity.

 
Furthermore, our ability to satisfy our debt service obligations will depend,
among other things, upon our future operating performance and ability to
refinance indebtedness when necessary.  These factors depend partly on economic,
financial, competitive and other factors beyond the Debtors’ control.  The
Debtors may not be able to generate sufficient cash from operations to meet
their debt service obligations as well as fund necessary capital expenditures
and investments in sales and marketing.  In addition, if we need to refinance
our debt, obtain additional financing or sell assets or equity, we may not be
able to do so on commercially reasonable terms, if at all.
 
A default by one of the Debtors under its debt obligations could result in the
acceleration of those obligations, which in turn could trigger cross-defaults
under other agreements governing our long-term indebtedness giving holders of
such indebtedness the right to accelerate.  In addition, the secured lenders
under the CCO Credit Facility, the holders of the CCO senior second-lien notes
and the secured lenders under the CCOH Credit Facility could foreclose on the
collateral, which includes equity interests in certain Debtors, and exercise
other rights of secured creditors.  Any default under our debt could adversely
affect our growth, our financial condition, our results of operations, the value
of our equity and our ability to make payments on our debt.  We may incur
significant additional debt in the future.  If current debt amounts increase,
the related risks that we now face will intensify.
 
 The agreements and instruments governing our debt and the debt of our
subsidiaries contain restrictions and limitations that could significantly
affect our ability to operate our business, as well as significantly affect our
liquidity.
 
Our credit facilities and the indentures governing our debt contain a number of
significant covenants that could adversely affect our ability to operate our
business, as well as significantly affect our liquidity, and therefore could
adversely affect our results of operations.  These covenants restrict, among
other things, the Debtors’ ability to:
 
·  
incur additional debt;

 
·  
repurchase or redeem equity interests and debt;

 
·  
issue equity;

 
·  
make certain investments or acquisitions;

 
·  
pay dividends or make other distributions;

 
·  
dispose of assets or merge;

 
·  
enter into related party transactions; and

 
·  
grant liens and pledge assets.

 
The breach of any covenants or obligations in the foregoing indentures or credit
facilities, not otherwise waived or amended, could result in a default under the
applicable debt obligations and could trigger acceleration of those obligations,
which in turn could trigger cross defaults under other agreements governing our
long-term indebtedness and acceleration of such indebtedness.  In addition, the
secured lenders under the CCO Credit Facility, the holders of the reorganized
CCO senior second-lien notes and the secured lenders under the CCOH Credit
Facility could foreclose on their collateral, which includes equity interests in
certain Debtors, and exercise other rights of secured creditors.  Any default
under those credit facilities or the indentures governing our convertible notes
or our debt could adversely affect our growth, our financial condition, results
of operations and ability to make payments on our debt.
 
 
 
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We depend on generating (and having available to the applicable obligor)
sufficient cash flow to fund our debt obligations, capital expenditures, and
ongoing operations.  Our access to additional financing may be limited, which
could adversely affect our financial condition and our ability to conduct our
business.
 
Our ability to service our debt and to fund our planned capital expenditures and
ongoing operations will depend on both our ability to generate and grow cash
flow and our access (by dividend or otherwise) to additional liquidity
sources.  Our ability to generate and grow cash flow is dependent on many
factors, including:
 
·  
the impact of competition from other distributors, including but not limited to
incumbent telephone companies, direct broadcast satellite operators, wireless
broadband providers and DSL providers;

 
·  
difficulties in growing and operating our telephone services, while adequately
meeting customer expectations for the reliability of voice services;

 
·  
our ability to adequately meet demand for installations and customer service;

 
·  
our ability to sustain and grow revenues and cash flows from operating
activities by offering video, high-speed Internet, telephone and other services,
and to maintain and grow our customer base, particularly in the face of
increasingly aggressive competition;

 
·  
our ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming costs;

 
·  
general business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy; and

 
·  
the effects of governmental regulation on our business.

 
Some of these factors are beyond our control.  It is also difficult to assess
the impact that the general economic downturn and recent turmoil in the credit
markets will have on future operations and financial results.  However, the
general economic downturn has resulted in reduced spending by customers and
advertisers, which may have impacted our revenues and our cash flows from
operating activities from those that otherwise would have been generated.  If we
are unable to generate sufficient cash flow or we are unable to access
additional liquidity sources, we may not be able to service and repay our debt,
operate our business, respond to competitive challenges, or fund our other
liquidity and capital needs.  It is uncertain whether we will be able, under
applicable law, to make distributions or otherwise move cash to the relevant
entities for payment of interest and principal.
 
 Risks Related to Our Business
 
 The Debtors operate in a very competitive business environment, which affects
the Debtors’ ability to attract and retain customers and can adversely affect
the Debtors’ business and operations.
 
The industry in which the Debtors operate is highly competitive and has become
more so in recent years.  In some instances, we compete against companies with
fewer regulatory burdens, easier access to financing, greater personnel
resources, greater resources for marketing, greater and more favorable brand
name recognition, and long-established relationships with regulatory authorities
and customers.  Increasing consolidation in the cable industry and the repeal of
certain ownership rules have provided additional benefits to certain of our
competitors, either through access to financing, resources, or efficiencies of
scale.
 
Our principal competitors for video services throughout our territory are direct
broadcast satellite (“DBS”) providers.  The two largest DBS providers are
DirecTV and Echostar.  Competition from DBS, including intensive marketing
efforts with aggressive pricing, exclusive programming and increased high
definition broadcasting has had an adverse impact on our ability to retain
customers.  DBS has grown rapidly over the last several years.  DBS companies
have also recently announced plans and technical actions to expand their
activities in the multiple
 
 
 
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dwelling unit (“MDU”) market.  The cable industry, including us, has lost a
significant number of video customers to DBS competition, and we face serious
challenges in this area in the future.
 
Telephone companies, including two major telephone companies, AT&T and Verizon,
and utility companies can offer video and other services in competition with us,
and we expect they will increasingly do so in the future.  Upgraded portions of
these networks carry two-way video and data services (DSL and FiOS) and digital
voice services that are similar to ours.  In the case of Verizon, high-speed
data services (FiOS) operate at speeds as high as or higher than ours.  These
services are offered at prices similar to those for comparable Charter
services.  Based on our internal estimates, we believe that AT&T and Verizon are
offering these services in areas serving approximately 14% to 17% of our
estimated homes passed as of December 31, 2008.  AT&T and Verizon have also
launched campaigns to capture more of the MDU market.  Additional upgrades and
product launches are expected in markets in which we operate.  With respect to
our Internet access services, we face competition, including intensive marketing
efforts and aggressive pricing, from telephone companies and other providers of
DSL.  DSL service is competitive with high-speed Internet service and is often
offered at prices lower than our Internet services, although often at speeds
lower than the speeds we offer.  In addition, in many of our markets, these
companies have entered into co-marketing arrangements with DBS providers to
offer service bundles combining video services provided by a DBS provider with
DSL and traditional telephone and wireless services offered by the telephone
companies and their affiliates.  These service bundles substantially resemble
our bundles.  Moreover, as we expand our telephone offerings, we will face
considerable competition from established telephone companies and other
carriers.
 
The existence of more than one cable system operating in the same territory is
referred to as an overbuild.  Overbuilds could adversely affect our growth,
financial condition, and results of operations, by creating or increasing
competition.  Based on internal estimates and excluding telephone companies, as
of December 31, 2008, we are aware of traditional overbuild situations impacting
approximately 8% to 9% of our estimated homes passed, and potential traditional
overbuild situations in areas servicing approximately an additional 1% of our
estimated homes passed.  Additional overbuild situations may occur in other
systems.
 
In order to attract new customers, from time to time we make promotional offers,
including offers of temporarily reduced price or free service.  These
promotional programs result in significant advertising, programming and
operating expenses, and also require us to make capital expenditures to acquire
and install customer premise equipment.  Customers who subscribe to our services
as a result of these offerings may not remain customers following the end of the
promotional period.  A failure to retain customers could have a material adverse
effect on our business.
 
Mergers, joint ventures, and alliances among franchised, wireless, or private
cable operators, DBS providers, local exchange carriers, and others, may provide
additional benefits to some of our competitors, either through access to
financing, resources, or efficiencies of scale, or the ability to provide
multiple services in direct competition with us.
 
In addition to the various competitive factors discussed above, our business is
subject to risks relating to increasing competition for the leisure and
entertainment time of consumers.  Our business competes with all other sources
of entertainment and information delivery, including broadcast television,
movies, live events, radio broadcasts, home video products, console games, print
media, and the Internet.  Technological advancements, such as video-on-demand,
new video formats, and Internet streaming and downloading, have increased the
number of entertainment and information delivery choices available to consumers,
and intensified the challenges posed by audience fragmentation.  The increasing
number of choices available to audiences could also negatively impact
advertisers’ willingness to purchase advertising from us, as well as the price
they are willing to pay for advertising.  If we do not respond appropriately to
further increases in the leisure and entertainment choices available to
consumers, our competitive position could deteriorate, and our financial results
could suffer.
 
We cannot assure you that the services we provide will allow us to compete
effectively.  Additionally, as we expand our offerings to include other
telecommunications services, and to introduce new and enhanced services, we will
be subject to competition from other providers of the services we
offer.  Competition may reduce our expected growth of future cash flows.  We
cannot predict the extent to which competition may affect our business and
results of operations.
 
 
 
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If our required capital expenditures exceed our projections, we may not have
sufficient funding, which could adversely affect our growth, financial condition
and results of operations.
 
During the year ended December 31, 2008, the Debtors spent approximately $1.2
billion on capital expenditures.  During 2009, we expect capital expenditures to
be approximately $1.2 billion.  The actual amount of our capital expenditures
depends on the level of growth in high-speed Internet and telephone customers,
and in the delivery of other advanced broadband services such as additional
high-definition channels, faster high-speed Internet services, DVRs and other
customer premise equipment, as well as the cost of introducing any new
services.  We may need additional capital if there is accelerated growth in
high-speed Internet customers, telephone customers or increased need to respond
to competitive pressures by expanding the delivery of other advanced
services.  If we cannot provide for such capital spending from increases in our
cash flow from operating activities, additional borrowings, proceeds from asset
sales or other sources, our growth, competitiveness, financial condition, and
results of operations could suffer materially.
 
 We may not have the ability to reduce the high growth rates of, or pass on to
our customers, our increasing programming costs, which would adversely affect
our cash flow and operating margins.
 
Programming has been, and is expected to continue to be, our largest operating
expense item.  In recent years, the cable industry has experienced a rapid
escalation in the cost of programming, particularly sports programming.  We
expect programming costs to continue to increase, and at a higher rate than in
2008, because of a variety of factors including amounts paid for retransmission
consent, annual increases imposed by programmers and additional programming,
including high definition and OnDemand programming, being provided to
customers.  The inability to fully pass these programming cost increases on to
our customers has had an adverse impact on our cash flow and operating margins
associated with the video product.  We have programming contracts that have
expired and others that will expire at or before the end of 2009.  There can be
no assurance that these agreements will be renewed on favorable or comparable
terms.  To the extent that we are unable to reach agreement with certain
programmers on terms that we believe are reasonable we may be forced to remove
such programming channels from our line-up, which could result in a further loss
of customers.
 
Increased demands by owners of some broadcast stations for carriage of other
services or payments to those broadcasters for retransmission consent are likely
to further increase our programming costs.  Federal law allows commercial
television broadcast stations to make an election between “must-carry” rights
and an alternative “retransmission-consent” regime.  When a station opts for the
latter, cable operators are not allowed to carry the station’s signal without
the station’s permission.  In some cases, we carry stations under short-term
arrangements while we attempt to negotiate new long-term retransmission
agreements.  If negotiations with these programmers prove unsuccessful, they
could require us to cease carrying their signals, possibly for an indefinite
period.  Any loss of stations could make our video service less attractive to
customers, which could result in less subscription and advertising revenue.  In
retransmission-consent negotiations, broadcasters often condition consent with
respect to one station on carriage of one or more other stations or programming
services in which they or their affiliates have an interest.  Carriage of these
other services may increase our programming expenses and diminish the amount of
capacity we have available to introduce new services, which could have an
adverse effect on our business and financial results.
 
 We face risks inherent in our telephone business.
 
We may encounter unforeseen difficulties as we increase the scale of our
telephone service offerings.  First, we face heightened customer expectations
for the reliability of telephone services as compared with our video and
high-speed data services.  We have undertaken significant training of customer
service representatives and technicians, and we will continue to need a highly
trained workforce.  If the service is not sufficiently reliable or we otherwise
fail to meet customer expectations, our telephone business could be adversely
affected. Second, the competitive landscape for telephone services is intense;
we face competition from providers of Internet telephone services, as well as
incumbent telephone companies.  Further, we face increasing competition for
residential telephone services as more consumers in the United States are
replacing traditional telephone service with wireless service.  All of this may
limit our ability to grow our telephone service.  Third, we depend on
interconnection and related services provided by certain third parties.  As a
result, our ability to implement changes as the service grows may be
limited.  Finally, we expect advances in communications technology, as well as
changes in the marketplace
 
 
 
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and the regulatory and legislative environment.  Consequently, we are unable to
predict the effect that ongoing or future developments in these areas might have
on our telephone business and operations.
 
 Our inability to respond to technological developments and meet customer demand
for new products and services could limit our ability to compete effectively.
 
The Debtors’ business is characterized by rapid technological change and the
introduction of new products and services, some of which are
bandwidth-intensive.  We cannot assure you that we will be able to fund the
capital expenditures necessary to keep pace with technological developments, or
that we will successfully anticipate the demand of our customers for products
and services requiring new technology or bandwidth beyond our expectations.  Our
inability to maintain and expand our upgraded systems and provide advanced
services in a timely manner, or to anticipate the demands of the marketplace,
could materially adversely affect our ability to attract and retain
customers.  Consequently, our growth, financial condition and results of
operations could suffer materially.
 
 Our exposure to the credit risks of our customers, vendors and third parties
could adversely affect our cash flow, results of operations and financial
condition.
 
The Debtors are exposed to risks associated with the potential financial
instability of our customers, many of whom may be adversely affected by the
general economic downturn.  Dramatic declines in the housing market over the
past year, including falling home prices and increasing foreclosures, together
with significant increases in unemployment, have severely affected consumer
confidence and may cause increased delinquencies or cancellations by our
customers or lead to unfavorable changes in the mix of products purchased.  The
general economic downturn also may affect advertising sales, as companies seek
to reduce expenditures and conserve cash.  Any of these events may adversely
affect our cash flow, results of operations and financial condition.
 
In addition, we are susceptible to risks associated with the potential financial
instability of the vendors and third parties on which we rely to provide
products and services or to which we delegate certain functions.  The same
economic conditions that may affect our customers, as well as volatility and
disruption in the capital and credit markets, also could adversely affect
vendors and third parties and lead to significant increases in prices, reduction
in output or the bankruptcy of our vendors or third parties upon which we
rely.  Any interruption in the services provided by our vendors or by third
parties could adversely affect our cash flow, results of operation and financial
condition.
 
 We depend on third party service providers, suppliers and licensors; thus, if
we are unable to procure the necessary services, equipment, software or licenses
on reasonable terms and on a timely basis, our ability to offer services could
be impaired, and our growth, operations, business, financial results and
financial condition could be materially adversely affected.
 
We depend on third party service providers, suppliers and licensors to supply
some of the services, hardware, software and operational support necessary to
provide some of our services.  We obtain these materials from a limited number
of vendors, some of which do not have a long operating history or which may not
be able to continue to supply the equipment and services we desire.  Some of our
hardware, software and operational support vendors, and service providers
represent our sole source of supply or have, either through contract or as a
result of intellectual property rights, a position of some exclusivity.  If
demand exceeds these vendors’ capacity or if these vendors experience operating
or financial difficulties, or are otherwise unable to provide the equipment or
services we need in a timely manner and at reasonable prices, our ability to
provide some services might be materially adversely affected, or the need to
procure or develop alternative sources of the affected materials or services
might delay our ability to serve our customers.  These events could materially
and adversely affect our ability to retain and attract customers, and have a
material negative impact on our operations, business, financial results and
financial condition.  A limited number of vendors of key technologies can lead
to less product innovation and higher costs.  For these reasons, we generally
endeavor to establish alternative vendors for materials we consider critical,
but may not be able to establish these relationships or be able to obtain
required materials on favorable terms.
 
In that regard, we currently purchase set-top boxes from a limited number of
vendors, because each of our cable systems use one or two proprietary
conditional access security schemes, which allows us to regulate subscriber
access to some services, such as premium channels.  We believe that the
proprietary nature of these conditional access schemes makes other manufacturers
reluctant to produce set-top boxes.  Future innovation in set-top boxes
 
 
 
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may be restricted until these issues are resolved.  In addition, we believe that
the general lack of compatibility among set-top box operating systems has slowed
the industry’s development and deployment of digital set-top box
applications.  In addition, in 2009, we plan to convert from two billing service
providers to one.  We will be dependent on these vendors for a properly executed
conversion and for the ongoing timely and appropriate service from the single
remaining vendor.
 
 Malicious and abusive Internet practices could impair our high-speed Internet
services.
 
The Debtors’ high-speed Internet customers utilize our network to access the
Internet and, as a consequence, we or they may become victim to common malicious
and abusive Internet activities, such as peer-to-peer file sharing, unsolicited
mass advertising (i.e., “spam”) and dissemination of viruses, worms, and other
destructive or disruptive software.  These activities could have adverse
consequences on our network and our customers, including degradation of service,
excessive call volume to call centers, and damage to our or our customers’
equipment and data.  Significant incidents could lead to customer
dissatisfaction and, ultimately, loss of customers or revenue, in addition to
increased costs to service our customers and protect our network.  Any
significant loss of high-speed Internet customers or revenue, or significant
increase in costs of serving those customers, could adversely affect our growth,
financial condition and results of operations.
 
 Risks Related to Mr. Allen’s Controlling Position
 
 The failure by Paul G. Allen, CCI’s chairman and controlling stockholder, to
maintain both a minimum voting interest and the largest voting interest in the
Reorganized Company could trigger a change of control default under the credit
facilities of the Reorganized Company’s subsidiaries.
 
The CCO Credit Facility provides that the failure by (a) Mr. Allen, (b) his
estate, spouse, immediate family members and heirs and (c) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners or other owners of which consist exclusively of Mr. Allen or such other
persons referred to in (b) above or a combination thereof to maintain both a 35%
direct or indirect voting interest and the largest voting interest in the
applicable borrower would result in a change of control default.  However, prior
to September 15, 2014, the New Class A Stock will be subject to the Voting
Threshold.  Such a default could result in the acceleration of indebtedness of
the Reorganized Company and the Reorganized Company’s subsidiaries, including
borrowings under the CCO Credit Facility.
 
Mr. Allen will control a large percentage of the Reorganized Company’s
stockholder votes.
 
After the Effective Date, Mr. Allen, directly or through certain of his
affiliates, will own approximately 35% of the voting power of the Reorganized
Company’s capital stock and be entitled to elect four of the 11 members to the
Board of Directors.  Mr. Allen thus may have the ability to influence
fundamental corporate transactions requiring equity holder approval, including,
but not limited to, merger transactions involving us and the sale of all or
substantially all of our assets.
 
 Risks Related to Regulatory and Legislative Matters
 
 Our business is subject to extensive governmental legislation and regulation,
which could adversely affect our business.
 
Regulation of the cable industry has increased cable operators’ operational and
administrative expenses and limited their revenues.  Cable operators are subject
to, among other things:
 
·  
rules governing the provision of cable equipment and compatibility with new
digital technologies;

 
·  
rules and regulations relating to subscriber and employee privacy;

 
·  
limited rate regulation;

 
·  
rules governing the copyright royalties that must be paid for retransmitting
broadcast signals;

 
 
 
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·  
requirements governing when a cable system must carry a particular broadcast
station and when it must first obtain consent to carry a broadcast station;

 
·  
requirements governing the provision of channel capacity to unaffiliated
commercial leased access programmers;

 
·  
rules limiting our ability to enter into exclusive agreements with multiple
dwelling unit complexes and control our inside wiring;

 
·  
rules, regulations, and regulatory policies relating to provision of voice
communications and high-speed Internet service;

 
·  
rules for franchise renewals and transfers; and

 
·  
other requirements covering a variety of operational areas such as equal
employment opportunity, technical standards, and customer service requirements.

 
Additionally, many aspects of these regulations are currently the subject of
judicial proceedings and administrative or legislative proposals.  There are
also ongoing efforts to amend or expand the federal, state, and local regulation
of some of our cable systems, such as “net neutrality” regulations that may
inhibit our ability to manage our network, or which may compound the regulatory
risks we already face, and proposals that might make it easier for our employees
to unionize.  Certain states and localities are considering new cable and
telecommunications taxes that could increase operating expenses.
 
 Our cable system franchises are subject to non-renewal or termination. The
failure to renew a franchise in one or more key markets could adversely affect
our business.
 
Our cable systems generally operate pursuant to franchises, permits, and similar
authorizations issued by a state or local governmental authority controlling the
public rights-of-way.  Many franchises establish comprehensive facilities and
service requirements, as well as specific customer service standards and
monetary penalties for non-compliance.  In many cases, franchises are terminable
if the franchisee fails to comply with significant provisions set forth in the
franchise agreement governing system operations.  Franchises are generally
granted for fixed terms and must be periodically renewed.  Franchising
authorities may resist granting a renewal if either past performance or the
prospective operating proposal is considered inadequate.  Franchise authorities
often demand concessions or other commitments as a condition to renewal.  In
some instances, local franchises have not been renewed at expiration, and we
have operated and are operating under either temporary operating agreements or
without a franchise while negotiating renewal terms with the local franchising
authorities.  Approximately 10% of our franchises, covering approximately 11% of
our video customers, were expired as of December 31, 2008.  On or about January
1, 2009, the Debtors converted a number of these expired franchises to statewide
authorization and were no longer considered expired.  Approximately 4% of
additional franchises, covering approximately an additional 4% of our video
customers, will expire on or before December 31, 2009, if not renewed prior to
expiration.
 
The traditional cable franchising regime is currently undergoing significant
change as a result of various federal and state actions.  Some of the new state
franchising laws do not allow us to immediately opt into statewide franchising
until (i) we have completed the term of the local franchise, in good standing,
(ii) a competitor has entered the market, or (iii) in limited instances, where
the local franchise allows the state franchise license to apply.  In many cases,
state franchising laws, and their varying application to us and new video
providers, will result in less franchise imposed requirements for our
competitors who are new entrants than for us until we are able to opt into the
applicable state franchise.
 
We cannot assure you that we will be able to comply with all significant
provisions of our franchise agreements and certain of our franchisors have from
time to time alleged that we have not complied with these
agreements.  Additionally, although historically we have renewed our franchises
without incurring significant costs, we cannot assure you that we will be able
to renew, or to renew as favorably, our franchises in the future.  A termination
of or a sustained failure to renew a franchise in one or more key markets could
adversely affect our business in the affected geographic area.
 
 
 
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Our cable system franchises are non-exclusive. Accordingly, local and state
franchising authorities can grant additional franchises and create competition
in market areas where none existed previously, resulting in overbuilds, which
could adversely affect results of operations.
 
Our cable system franchises are non-exclusive.  Consequently, local and state
franchising authorities can grant additional franchises to competitors in the
same geographic area or operate their own cable systems.  In some cases, local
government entities and municipal utilities may legally compete with us without
obtaining a franchise from the local franchising authority.  In addition,
certain telephone companies are seeking authority to operate in communities
without first obtaining a local franchise.  As a result, competing operators may
build systems in areas in which we hold franchises.
 
In a series of recent rulemakings, the FCC adopted new rules that streamline
entry for new competitors (particularly those affiliated with telephone
companies) and reduce franchising burdens for these new entrants.  At the same
time, a substantial number of states recently have adopted new franchising
laws.  Again, these new laws were principally designed to streamline entry for
new competitors, and they often provide advantages for these new entrants that
are not immediately available to existing operators.  As a result of these new
franchising laws and regulations, we have seen an increase in the number of
competitive cable franchises or operating certificates being issued, and we
anticipate that trend to continue.
 
 Local franchise authorities have the ability to impose additional regulatory
constraints on our business, which could further increase our expenses.
 
In addition to the franchise agreement, cable authorities in some jurisdictions
have adopted cable regulatory ordinances that further regulate the operation of
cable systems.  This additional regulation increases the cost of operating our
business.  We cannot assure you that the local franchising authorities will not
impose new and more restrictive requirements.  Local franchising authorities who
are certified to regulate rates in the communities where they operate generally
have the power to reduce rates and order refunds on the rates charged for basic
service and equipment.
 
 Further regulation of the cable industry could cause us to delay or cancel
service or programming enhancements, or impair our ability to raise rates to
cover our increasing costs, resulting in increased losses.
 
Currently, rate regulation is strictly limited to the basic service tier and
associated equipment and installation activities.  However, the FCC and Congress
continue to be concerned that cable rate increases are exceeding inflation.  It
is possible that either the FCC or Congress will further restrict the ability of
cable system operators to implement rate increases.  Should this occur, it would
impede our ability to raise our rates.  If we are unable to raise our rates in
response to increasing costs, our losses would increase.
 
There has been legislative and regulatory interest in requiring cable operators
to offer historically bundled programming services on an á la carte basis, or to
at least offer a separately available child-friendly “family tier.”  It is
possible that new marketing restrictions could be adopted in the future. Such
restrictions could adversely affect our operations.
 
 Actions by pole owners might subject us to significantly increased pole
attachment costs.
 
Pole attachments are cable wires that are attached to utility poles.  Cable
system attachments to public utility poles historically have been regulated at
the federal or state level, generally resulting in favorable pole attachment
rates for attachments used to provide cable service.  The FCC previously
determined that the lower cable rate was applicable to the mixed use of a pole
attachment for the provision of both cable and Internet access
services.  However, in late 2007, the FCC issued an NPRM, in which it
“tentatively concludes” that this approach should be modified.  The change could
affect the pole attachment rates we pay when we offer either data or voice
services over our broadband facility.  Any changes in the FCC approach could
result in a substantial increase in our pole attachment costs.
 
 
 
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Increasing regulation of our Internet service product adversely affect our
ability to provide new products and services.
 
There has been continued advocacy by certain Internet content providers and
consumer groups for new federal laws or regulations to adopt so-called “net
neutrality” principles limiting the ability of broadband network owners (like
us) to manage and control their own networks.  In August 2005, the FCC issued a
nonbinding policy statement identifying four principles to guide its
policymaking regarding high-speed Internet and related services.  These
principles provide that consumers are entitled to:  (i) access lawful Internet
content of their choice; (ii) run applications and services of their choice,
subject to the needs of law enforcement; (iii) connect their choice of legal
devices that do not harm the network; and (iv) enjoy competition among network
providers, application and service providers, and content providers.  In August
2008, the FCC issued an order concerning one Internet network management
practice in use by another cable operator, effectively treating the four
principles as rules and ordering a change in network management
practices.  Although that decision is on appeal, additional proposals for new
legislation, and for more expansive conditions associated with the broadband
provisions of the new American Recovery and Reinvestment Act, could impose
additional obligations on high-speed Internet providers.  Any such rules or
statutes could limit our ability to manage our cable systems (including use for
other services), obtain value for use of our cable systems and respond to
competitive competitions.
 
 Changes in channel carriage regulations could impose significant additional
costs on us.
 
Cable operators also face significant regulation of their channel carriage.  We
can be required to devote substantial capacity to the carriage of programming
that we might not carry voluntarily, including certain local broadcast signals;
local public, educational and government access (“PEG”) programming; and
unaffiliated, commercial leased access programming (required channel capacity
for use by persons unaffiliated with the cable operator who desire to distribute
programming over a cable system).  The FCC adopted a transition plan in 2007
addressing the cable industry’s broadcast carriage obligations once the
broadcast industry migration from analog to digital transmission is completed,
which is expected to occur in June 2009.  Under the FCC’s transition plan, most
cable systems will be required to offer both an analog and digital version of
local broadcast signals for three years after the digital transition date.  This
burden could increase further if we are required to carry multiple programming
streams included within a single digital broadcast transmission (multicast
carriage) or if our broadcast carriage obligations are otherwise expanded.  The
FCC also adopted new commercial leased access rules which dramatically reduce
the rate we can charge for leasing this capacity and dramatically increase our
associated administrative burdens.  These regulatory changes could disrupt
existing programming commitments, interfere with our preferred use of limited
channel capacity, and limit our ability to offer services that would maximize
our revenue potential.  It is possible that other legal restraints will be
adopted limiting our discretion over programming decisions.
 
 Offering voice communications service may subject us to additional regulatory
burdens, causing us to incur additional costs.
 
We offer voice communications services over our broadband network and continue
to develop and deploy voice over Internet Protocol (“VoIP”) services.  The FCC
has declared that certain VoIP services are not subject to traditional state
public utility regulation.  The full extent of the FCC preemption of state and
local regulation of VoIP services is not yet clear.  Expanding our offering of
these services may require us to obtain certain authorizations, including
federal and state licenses.  We may not be able to obtain such authorizations in
a timely manner, or conditions could be imposed upon such licenses or
authorizations that may not be favorable to us.  The FCC has extended certain
traditional telecommunications requirements, such as E911, Universal Service
fund collection, CALEA, Customer Proprietary Network Information and telephone
relay requirements to many VoIP providers such as us.  Telecommunications
companies generally are subject to other significant regulation which could also
be extended to VoIP providers.  If additional telecommunications regulations are
applied to our VoIP service, it could cause us to incur additional costs.
 
 
 
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Confirmation Of The Plan
 
 The Confirmation Hearing
 
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after
notice, to hold a hearing on confirmation of the Plan of
Reorganization.  Section 1128(b) of the Bankruptcy Code provides that any party
in interest may object to confirmation of the Plan of Reorganization.
 
The Bankruptcy Court has scheduled the confirmation hearing for [●], 2009 at [●]
(Eastern Time) before the Honorable [●], United States Bankruptcy Judge, in the
United States Bankruptcy Court for the Southern District of New York, located at
Alexander Hamilton Custom House, One Bowling Green, New York, New York,
10004.  The confirmation hearing may be adjourned from time to time without
further notice except for an announcement of the adjourned date made at the
confirmation hearing or any adjournment thereof.
 
 Deadline To Object To Confirmation
 
Objections to the Bankruptcy Court’s Confirmation of the Plan must be filed and
served at or before 5:00 p.m. Eastern Time on [●], 2009 in accordance with the
notice of the confirmation hearing that accompanies this Disclosure
Statement.  Unless objections to the Confirmation are timely served and filed,
they may not be considered by the Bankruptcy Court.
 
 Requirements For Confirmation Of The Plan
 
Among the requirements for the Confirmation of the Plan are that the Plan (1) is
accepted by all impaired classes of claims and equity interests, or if rejected
by an impaired class, that the Plan “does not discriminate unfairly” and is
“fair and equitable” as to such class, (2) is feasible, and (3) is in the “best
interests” of holders of claims and equity interests that are impaired under the
Plan.
 
At the Confirmation Hearing, the Bankruptcy Court will determine whether the
Plan satisfies the requirements of section 1129 of the Bankruptcy Code.  The
Debtors believe that:  (1) the Plan satisfies or will satisfy all of the
necessary statutory requirements of Chapter 11 of the Bankruptcy Code; (2) the
Debtors have complied or will have complied with all of the necessary
requirements of Chapter 11 of the Bankruptcy Code; and (3) the Plan has been
proposed in good faith.  Specifically, in addition to other applicable
requirements, the Debtors believe that the Plan satisfies or will satisfy the
applicable Confirmation requirements of section 1129 of the Bankruptcy Code set
forth below:
 
·  
The Plan complies with the applicable provisions of the Bankruptcy Code.

 
·  
The Debtors, as the Plan proponents, have complied with the applicable
provisions of the Bankruptcy Code.

 
·  
The Plan has been proposed in good faith and not by any means forbidden by law.

 
·  
Any payment made or promised under the Plan for services or for costs and
expenses in, or in connection with, the Chapter 11 Cases, or in connection with
the Plan and incident to the case, has been disclosed to the Bankruptcy Court,
and any such payment:  (1) made before the Confirmation of the Plan is
reasonable; or (2) subject to the approval of the Bankruptcy Court as
reasonable, if it is to be fixed after Confirmation of the Plan.

 
·  
Either each Holder of an impaired Claim has accepted the Plan, or will receive
or retain under the Plan on account of such Claim, property of a value, as of
the Effective Date of the Plan, that is not less than the amount that such
Holder would receive or retain if the Debtors were liquidated on that date under
Chapter 7 of the Bankruptcy Code, including pursuant to section 1129(b) of the
Bankruptcy Code for Equity Interests deemed to reject the Plan.

 
·  
Each Class of Claims that is entitled to vote on the Plan will have accepted the
Plan, or the Plan can be confirmed without the approval of such Class pursuant
to section 1129(b) of the Bankruptcy Code.

 
 
 
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·  
Except to the extent that the Holder of a particular Claim will agree to a
different treatment of its Claim, the Plan provides that Administrative Claims
and Priority Tax Claims will be paid in full on the Effective Date, or as soon
thereafter as is reasonably practicable.

 
·  
At least one Class of impaired Claims will have accepted the Plan, determined
without including any acceptance of the Plan by any insider holding a Claim in
that Class.

 
·  
Confirmation of the Plan is not likely to be followed by the liquidation or the
need for further financial reorganization of the Debtors or any successors
thereto under the Plan.

 
·  
All fees of the type described in 28 U.S.C. § 1930, including the fees of the
United States Trustee, will be paid as of the Effective Date.

 
            Best Interests of Creditors/Liquidation Analysis
 
Often called the “best interests” test, section 1129(a)(7) of the Bankruptcy
Code requires that a bankruptcy court find, as a condition to confirmation, that
a Chapter 11 plan provides, with respect to each class, that each holder of a
claim or an equity interest in such class either (a) has accepted the plan or
(b) will receive or retain under the plan property of a value, as of the
effective date of the plan, that is not less than the amount that such holder
would receive or retain if the debtors liquidated under Chapter 7 of the
Bankruptcy Code.  To make these findings, the bankruptcy court must:  (a)
estimate the cash liquidation proceeds that a Chapter 7 trustee would generate
if each of the debtor’s Chapter 11 cases were converted to a Chapter 7 case and
the assets of such debtor’s estate were liquidated; (b) determine the
liquidation distribution that each non-accepting holder of a claim or an equity
interest would receive from such liquidation proceeds under the priority scheme
dictated in Chapter 7; and (c) compare such holder’s liquidation distribution to
the distribution under the plan that such holder would receive if the plan were
confirmed and consummated.
 
To estimate what members of each impaired class of claims would receive if the
Debtors were liquidated under Chapter 7 of the Bankruptcy Code, the Bankruptcy
Court must first determine the aggregate dollar amount that would be available
if each of the Chapter 11 Cases were converted to a Chapter 7 case under the
Bankruptcy Code and each of the respective Debtor’s assets were liquidated by a
Chapter 7 trustee (the “Liquidation Value”).  The Liquidation Value of a Debtor
would consist of the net proceeds from the disposition of the assets of the
Debtor, augmented by any cash held by the Debtor.
 
The Liquidation Value available to holders of general unsecured claims or equity
interests would be reduced by, among other things: (a) the claims of secured
creditors to the extent of the value of their collateral; (b) the costs, fees
and expenses of the liquidation, as well as other administrative expenses of the
Debtors’ Chapter 7 cases; (c) unpaid administrative expense claims of the
Chapter 11 Cases; and (d) priority claims and priority tax claims.  The Debtors’
costs of liquidation in Chapter 7 cases would include the compensation of a
Chapter 7 trustee, as well as of counsel and other professionals retained by
such trustee, asset disposition expenses, applicable taxes, litigation costs,
claims arising from the operation of the Debtors during the Chapter 7 cases, and
all unpaid administrative expense claims incurred by the Debtors during the
Chapter 11 Cases that are allowed in the Chapter 7 cases.  The liquidation
itself would trigger certain priority claims, such as claims for severance pay,
and would likely accelerate the payment of other priority claims and priority
tax claims that would otherwise be payable in the ordinary course of
business.  These priority claims and priority tax claims would be paid in full
out of the net liquidation proceeds, after payment of secured claims, before the
balance would be made available to pay other claims or to make any distribution
in respect of equity interests.
 
Based on the Liquidation Analyses set forth in Exhibit E of this Disclosure
Statement, the Debtors believe that holders of Claims will receive equal or
greater value as of the Effective Date under the Plan than such Holders would
receive in a Chapter 7 liquidation.  Moreover, in an actual liquidation of the
Debtors, distributions to holders of Claims would be made substantially later
than the Effective Date designated in the Plan.  This delay would materially
reduce the amount determined on a present value basis available for distribution
to Holders of General Unsecured Claims.  The hypothetical Chapter 7 liquidations
of the Debtors, for purposes of determination of the Debtors’ Liquidation Value,
are assumed to commence on September 30, 2009.
 
 
 
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In summary, the Debtors and their management believe that Chapter 7 liquidations
of the Debtors would result in substantial diminution in the value to be
realized by Holders of General Unsecured Claims entitled to distribution, as
compared to the distributions contemplated under the Plan, because of, among
other factors:
 
·  
the increased cost and expenses of liquidation under Chapter 7 arising from fees
payable to the Chapter 7 trustee and the attorneys and other professional
advisors to such trustee;

 
·  
additional expenses and claims, some of which would be entitled to priority and
which would be generated during the liquidation and from the rejection of
unexpired leases and executory contracts in connection with the cessation of the
Debtors’ operations;

 
·  
the erosion of the value of the Debtors’ assets in the context of an expedited
liquidation required under Chapter 7 and the “forced sale” atmosphere that would
prevail;

 
·  
the adverse effects on the salability of portions of the business resulting from
the possible departure of key employees and the attendant loss of customers and
vendors;

 
·  
the cost and expense attributable to the time value of money resulting from a
potentially more protracted Chapter 7 proceeding than the estimated length of
the Chapter 11 Cases; and

 
·  
the application of the rule of absolute priority under the Bankruptcy Code to
distributions made in a Chapter 7 liquidation.

 
Consequently, the Debtors and their management believe that confirmation of the
Plan will provide a substantially greater return to holders of claims than would
Chapter 7 liquidations.
 
If the Plan is not confirmed and the Debtors fail to propose and confirm an
alternative plan of reorganization, they may be liquidated pursuant to the
provisions of a Chapter 11 liquidating plan.  In liquidations under Chapter 11,
the Debtors’ assets could be sold in an orderly fashion over a more extended
period of time than in liquidations under Chapter 7.  Thus, a Chapter 11
liquidation might result in larger recoveries than in a Chapter 7 liquidation,
but the delay in distributions could result in lower present values received and
higher administrative costs.  Because a trustee’s appointment is not required in
a Chapter 11 case, expenses for professional fees could be lower than in a
Chapter 7 case, in which a Chapter 7 trustee must be appointed.  Any
distribution to holders of claims under a Chapter 11 liquidation plan probably
would be delayed substantially.  Most importantly, the Debtors believe that any
distributions to creditors in a liquidation scenario would fail to capture the
significant “going concern” value of their business, which is reflected in the
New Common Stock to be distributed under the Plan.  Accordingly, the Debtors
believe that Chapter 11 liquidation would not result in distributions as
favorable as those under the Plan.
 
            Feasibility
 
Section 1129(a)(11) of the Bankruptcy Code requires that confirmation of the
plan of reorganization is not likely to be followed by the liquidation, or the
need for further financial reorganization of the debtors, or any successor to
the debtors (unless such liquidation or reorganization is proposed in the plan
of reorganization).
 
To determine whether the Plan meets this feasibility requirement, the Debtors
have analyzed their ability to meet their respective obligations under the
Plan.  As part of this analysis, the Debtors have prepared the Projections, as
set forth on Exhibit C.  Based upon the Projections, the Debtors believe that
the Debtors will be a viable operation following the Chapter 11 Cases, and that
the Plan will meet the feasibility requirements of the Bankruptcy Code.
 
 Acceptance by Impaired Classes
 
The Bankruptcy Code requires, as a condition to confirmation, that, except as
described in the following section, each class of claims or equity interests
that is impaired under a plan, accept the plan.  A class that is not “impaired”
under a plan is deemed to have accepted the plan and, therefore, solicitation of
acceptances with respect to such class is not required.  A class is “impaired”
unless the plan:  (a) leaves unaltered the legal, equitable and contractual
rights to which the claim or the equity interest entitles the holder of such
claim or equity interest; or
 
 
 
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(b) cures any default, reinstates the original terms of such obligation,
compensates the holder for certain damages or losses, as applicable, and does
not otherwise alter the legal, equitable or contractual rights to which such
claim or equity interest entitles the holder of such claim or equity interest.
 
Section 1126(c) of the Bankruptcy Code defines acceptance of a plan by a class
of impaired claims as acceptance by holders of at least two-thirds in dollar
amount and more than one-half in number of allowed claims in that class,
counting only those claims that actually voted to accept or to reject the
plan.  Thus, a class of claims will have voted to accept the plan only if
two-thirds in amount and a majority in number actually voting cast their ballots
in favor of acceptance.  For a class of impaired equity interests to accept a
plan, section 1126(d) of the Bankruptcy Code requires acceptance by equity
interest holders that hold at least two-thirds in amount of the allowed equity
interests of such class, counting only those equity interests that actually
voted to accept or reject the plan.  Thus, a class of equity interests will have
voted to accept the plan only if two-thirds in amount actually voting cast their
ballots in favor of acceptance.
 
 Confirmation Without Acceptance by All Impaired Classes
 
Section 1129(b) of the Bankruptcy Code allows a bankruptcy court to confirm a
plan even if all impaired classes have not accepted it, provided that the plan
has been accepted by at least one impaired class.  Pursuant to section 1129(b)
of the Bankruptcy Code, notwithstanding an impaired class’s rejection or deemed
rejection of the plan, such plan will be confirmed, at the plan proponent’s
request, in a procedure commonly known as “cramdown,” so long as the plan does
not “discriminate unfairly” and is “fair and equitable” with respect to each
class of claims or equity interests that is impaired under, and has not
accepted, the plan.
 
 No Unfair Discrimination
 
This test applies to classes of claims or equity interests that are of equal
priority and are receiving different treatment under the Plan.  The test does
not require that the treatment be the same or equivalent, but that such
treatment be “fair.”  In general, bankruptcy courts consider whether a plan
discriminates unfairly in its treatment of classes of claims of equal rank
(e.g., classes of the same legal character).  Bankruptcy courts will take into
account a number of factors in determining whether a plan discriminates
unfairly, and, accordingly, a plan could treat two classes of unsecured
creditors differently without unfairly discriminating against either class.
 
 Fair and Equitable Test
 
This test applies to classes of different priority and status (e.g., secured
versus unsecured) and includes the general requirement that no class of claims
receive more than 100% of the amount of the allowed claims in such class.  As to
the dissenting class, the test sets different standards depending upon the type
of claims or equity interests in such class.
 
Secured Claims:  The condition that a plan be “fair and equitable” to a
non-accepting class of secured claims includes the requirements that:  (1) the
holders of such secured claims retain the liens securing such claims to the
extent of the allowed amount of the claims, whether the property subject to the
liens is retained by the debtor or transferred to another entity under the plan;
and (2) each holder of a secured claim in the class receives deferred cash
payments totaling at least the allowed amount of such claim with a value, as of
the effective date of the plan, at least equivalent to the value of the secured
claimant’s interest in the debtor’s property subject to the liens.
 
Unsecured Claims:  The condition that a plan be “fair and equitable” to a
non-accepting class of unsecured claims includes the requirement that
either:  (1) the plan provides that each holder of a claim of such class receive
or retain on account of such claim property of a value, as of the effective date
of the plan, equal to the allowed amount of such claim; or (2) the holder of any
claim or any equity interest that is junior to the claims of such class will not
receive or retain under the plan on account of such junior claim or junior
equity interest any property, subject to the applicability of the “new value”
exception.
 
Equity Interests:  The condition that a plan be “fair and equitable” to a
non-accepting class of equity interests includes the requirements that
either:  (1) the plan provides that each holder of an equity interest in that
class receives or retains under the plan on account of that equity interest
property of a value, as of the effective
 
 
 
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date of the plan, equal to the greater of:  (a) the allowed amount of any fixed
liquidation preference to which such holder is entitled; (b) any fixed
redemption price to which such holder is entitled; or (c) the value of such
interest; or (2) if the class does not receive the amount as required under (1)
hereof, no class of equity interests junior to the non-accepting class may
receive a distribution under the plan.
 
If any Impaired Class rejects the Plan, the Debtors reserve the right to seek to
confirm the Plan utilizing the “cramdown” provision of section 1129(b) of the
Bankruptcy Code.  To the extent that any Impaired Class rejects the Plan or is
deemed to have rejected the Plan, the Debtors will request confirmation of the
Plan, as it may be modified from time to time, under section 1129(b) of the
Bankruptcy Code.  The Debtors reserve the right to alter, amend, modify, revoke
or withdraw the Plan or any Plan Exhibit or Schedule, including to amend or
modify it to satisfy the requirements of section 1129(b) of the Bankruptcy Code.
 
The Debtors submit that if the Debtors “cram down” the Plan pursuant to section
1129(b) of the Bankruptcy Code, the Plan is structured such that it does not
“discriminate unfairly” and satisfies the “fair and equitable”
requirement.  With respect to the unfair discrimination requirement, all Classes
under the Plan are provided treatment that is substantially equivalent to the
treatment that is provided to other Classes that have equal rank.  The Debtors
believe that the Plan and the treatment of all Classes of Claims and Equity
Interests under the Plan satisfy the foregoing requirements for nonconsensual
confirmation of the Plan.
 
            New Value
 
A corollary to the “fair and equitable” test, the new value doctrine, permits
old equity holders to keep their ownership interests even though senior
dissenting creditors do not receive payment in full of their claims provided
that the old equity holders make a new contribution (a) in money or money's
worth, (b) that is reasonably equivalent to the value of the new equity
interests being received in the reorganized debtor, and (c) that is necessary
for implementation of a feasible plan of reorganization.  Pursuant to the Plan,
certain of the Debtors, as old equity holders, will receive Interests in certain
Reorganized Debtors on account of a contribution of new value
consideration.   See “Treatment of Claims Against and Interests in the Debtors,”
which begins on page 32 for a discussion of Classes receiving New Value
Interests.  The Debtors believe that the consideration received on account of
such Interests is reasonably equivalent to the value of such Interests and that
such new value contribution is necessary for the implementation of the Plan.
 
 Valuation Of the Debtors
 
In conjunction with formulating the Plan, the Debtors determined that it was
necessary to estimate the post-confirmation going concern value of the
Debtors.  Accordingly, such valuation is set forth in Exhibit D attached hereto.
 
Effect Of Confirmation Of The Plan
 
 Preservation of Avoidance Actions
 
On and after the effective date, actions, including preference actions,
fraudulent transfer and conveyance actions, rights of setoff and other Claims or
causes of action under sections 510, 544, 547, 548, 549, 550 and/or 553 of the
Bankruptcy Code and other applicable bankruptcy or non-bankruptcy law
(collectively, the “Avoidance Actions”) will be preserved and retained by the
Debtors.  The Debtors may offset any claim supporting an Avoidance Action
against any payment due to any Holder of a claim under the Plan.  In addition,
if a distribution is made in error, the Debtors can bring an action pursuant to
section 502(d) of the Bankruptcy Code to recoup such distribution.  In the event
that the Plan, as proposed, is consummated, Avoidance Actions that may
potentially be brought might be waived; provided, however that such waiver is
not effective if the Plan is not effectuated.
 
 Retention of Jurisdiction by the Bankruptcy Court
 
Notwithstanding the entry of the Confirmation Order and the occurrence of the
Effective Date, the Bankruptcy Court will retain exclusive jurisdiction over all
matters arising out of, or related to, the Chapter 11 Cases and the Plan
pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including
jurisdiction to:
 
 
 
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Allow, disallow, determine, liquidate, classify, estimate, or establish the
priority, secured or unsecured status, or amount of any Claim or Interest,
including the resolution of any request for payment of any Administrative Claim
and the resolution of any and all objections to the secured or unsecured status,
priority, amount, or allowance of Claims or Interests;
 
·  
Decide and resolve all matters related to the granting and denying, in whole or
in part, any applications for allowance of compensation or reimbursement of
expenses to Professionals authorized pursuant to the Bankruptcy Code or the
Plan;

 
·  
Resolve any matters related to: (a) the assumption, assumption and assignment,
or rejection of any executory contract or unexpired lease to which a Debtor is
party or with respect to which a Debtor may be liable and to hear, determine,
and, if necessary, liquidate, any Cure or Claims arising therefrom, including
Cure or Claims pursuant to section 365 of the Bankruptcy Code; (b) any potential
contractual obligation under any executory contract or unexpired lease that is
assumed; and (c) any dispute regarding whether a contract or lease is or was
executory or expired;

 
·  
Ensure that distributions to Holders of Allowed Claims and Interests are
accomplished pursuant to the provisions of the Plan;

 
·  
Adjudicate, decide, or resolve any motions, adversary proceedings, contested or
litigated matters, and any other matters, and grant or deny any applications
involving a Debtor that may be pending on the Effective Date;

 
·  
Adjudicate, decide, or resolve any and all matters related to Causes of Action;

 
·  
Adjudicate, decide, or resolve any and all matters related to section 1141 of
the Bankruptcy Code;

 
·  
Enter and implement such orders as may be necessary or appropriate to execute,
implement, or consummate the provisions of the Plan and all contracts,
instruments, releases, indentures, and other agreements or documents created in
connection with the Plan or the Disclosure Statement;

 
·  
Enter and enforce any order for the sale of property pursuant to sections 363,
1123, or 1146(a) of the Bankruptcy Code;

 
·  
Resolve any cases, controversies, suits, disputes, or Causes of Action that may
arise in connection with the Consummation, interpretation, or enforcement of the
Plan or any Entity’s obligations incurred in connection with the Plan;

 
·  
Issue injunctions, enter and implement other orders, or take such other actions
as may be necessary or appropriate to restrain interference by any Entity with
Consummation or enforcement of the Plan;

 
·  
Resolve any cases, controversies, suits, disputes, or Causes of Action with
respect to the releases, injunctions, and other provisions contained in the Plan
and Confirmation Order and enter such orders as may be necessary or appropriate
to implement such releases, injunctions, and other provisions;

 
·  
Resolve any cases, controversies, suits, disputes, or Causes of Action with
respect to the repayment or return of distributions and the recovery of
additional amounts owed by the Holder of a Claim or Interest for amounts not
timely repaid pursuant to the Plan;

 
·  
Enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked, or
vacated;

 
·  
Determine any other matters that may arise in connection with or relate to the
Plan, the Disclosure Statement, the Confirmation Order, or any contract,
instrument, release, indenture, or other agreement or document created in
connection with the Plan or the Disclosure Statement;

 
·  
Enter an order or Final Decree concluding or closing the Chapter 11 Cases;

 
 
 
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·  
Adjudicate any and all disputes arising from or relating to distributions under
the Plan;

 
·  
Consider any modifications of the Plan, to cure any defect or omission, or to
reconcile any inconsistency in any Bankruptcy Court order, including the
Confirmation Order;

 
·  
Determine requests for the payment of Claims and Interests entitled to priority
pursuant to section 507 of the Bankruptcy Code;

 
·  
Hear and determine disputes arising in connection with the interpretation,
implementation, or enforcement of the Plan, or the Confirmation Order, including
disputes arising under agreements, documents, or instruments executed in
connection with the Plan;

 
·  
Hear and determine matters concerning state, local, and U.S. federal taxes in
accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 
·  
Hear and determine all disputes involving the existence, nature, or scope of the
Debtors’ discharge, including any dispute relating to any liability arising out
of the termination of employment or the termination of any employee or retiree
benefit program, regardless of whether such termination occurred prior to or
after the Effective Date;

 
·  
Enforce all orders previously entered by the Bankruptcy Court; and

 
·  
Hear any other matter not inconsistent with the Bankruptcy Code.

 
 Term of Bankruptcy Injunction or Stays
 
 Injunction
 
From and after the Effective Date, all entities are permanently enjoined from
commencing or continuing in any manner, any cause of action released or to be
released pursuant to the Plan or the Confirmation Order.
 
 Releases
 
(A)           Releases By the Debtors
 
On the Effective Date and effective as of the Effective Date, for the good and
valuable consideration provided by each of the Debtor Releasees (as defined
below), including:  (1) the discharge of debt and all other good and valuable
consideration paid pursuant to the Plan; (2) the obligations of the Holders of
Claims party to Plan Support Agreements to provide the support necessary for the
Effective Date of the Plan; and (3) the services of the Debtors’ present and
former officers and directors in facilitating the expeditious implementation of
the restructuring contemplated by the Plan, each of the Debtors will provide a
full discharge and release to each Releasing Party, including each other Debtor,
and each of their respective members, officers, directors, agents, financial
advisors, attorneys, employees, partners, affiliates and representatives
(collectively, the “Debtor Releasees” (and each such Debtor Releasee so released
will be deemed released and discharged by the Debtors)) and their respective
properties from any and all Causes of Action, whether known or unknown, whether
for tort, fraud, contract, violations of federal or state securities laws, or
otherwise, arising from or related in any way to the Debtors, including those
that any of the Debtors or Reorganized Debtors would have been legally entitled
to assert against a Debtor Releasee in their own right (whether individually or
collectively) or that any Holder of a Claim or Interest or other entity, would
have been legally entitled to assert on behalf of any of the Debtors or any of
their Estates, including those in any way related to the Chapter 11 Cases or the
Plan to the fullest extent of the law; provided, however, that the foregoing
“Debtor Release” will not operate to waive or release any person or Entity other
than a Releasing Party from any causes of action expressly set forth in and
preserved by the Plan, and provided further that the foregoing “Debtor Release”
shall not impair the rights of any Debtor in any litigation pending against a
Debtor as of the day before the Petition Date.  Notwithstanding anything in the
Plan to the
 
 
 
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contrary, the Debtors or the Reorganized Debtors will not release any Causes of
Action that they may have now or in the future against the Non-Released Parties.
 
(B)           Releases By the Holders
 
On the Effective Date and effective as of the Effective Date, the Holders of
Claims and Interests will be deemed to provide a full discharge and release to
the Debtor Releasees and their respective property from any and all Causes of
Action, whether known or unknown, whether for tort, fraud, contract, violations
of federal or state securities laws, or otherwise, arising from or related in
any way to the Debtors, including those in any way related to the Chapter 11
Cases or the Plan; provided, further, that the foregoing “Third Party Release”
will not operate to waive or release any person or Entity (other than a Debtor
Releasee) from any Causes of Action expressly set forth in and preserved by the
Plan, the Plan Supplement or related documents, and provided further that the
foregoing “Third Party Release” shall not impair the rights to which an Allowed
Unimpaired Claim entitles the Holder of such Allowed Unimpaired Claim.
 
The foregoing Third Party Release is justified as an integral part of the
Debtors’ overall restructuring efforts.  Specifically, the Debtor Releasees and
non-Debtor Releasees have all made substantial contributions to the Debtors’
estates; indeed, without such contributions the Debtors could not have proposed
a confirmable Plan.  Put simply, the Debtors’ proposed Plan represents
demonstrably unique circumstances.
 
As an initial matter, the Debtors’ employees, directors, officers, and advisors
have all performed vital roles in the Debtors’ negotiation of the largest
prearranged Plan in history.  And at least equally importantly, as noted above,
the released parties include certain non-Debtor Holders of Claims party to Plan
Support Agreements to supply critical financing for the Debtors’ successful exit
from chapter 11.
 
The non-Debtor Releasees also include Paul G. Allen, Charter's primary
prepetition shareholder, who has likewise executed a Plan Support Agreement and
is making a substantial contribution to the Debtors' estates.  In exchange for a
settlement in full of all claims Mr. Allen and his related entities may hold
against the Debtors, Mr. Allen has agreed to numerous restructuring obligations
without which the Debtors could not reinstate certain debt – the linchpin of the
success of the Debtors' proposed Plan – or take advantage of significant tax
attributes that constitute extremely valuable assets of the Debtors' estates.
 
These non-Debtor Releasees would not have agreed to make their respective
substantial financing contributions in the absence of the proposed releases.
 
Notwithstanding anything in the Plan to the contrary, the Releasing Parties will
not release any Causes of Action that they, the Debtors or the Reorganized
Debtors may have now or in the future against the Non-Released Parties.  Entry
of the Confirmation Order will constitute the Bankruptcy Court’s approval,
pursuant to Bankruptcy Rule 9019, of the Third Party Release, and further, will
constitute its finding that the Third Party Release is:  (1) in exchange for the
good and valuable consideration provided by the Debtor Releasees, a good faith
settlement and compromise of the claims released by the Third Party Release; (2)
in the best interests of the Debtors and all Holders of Claims; (3) fair,
equitable and reasonable; (4) given and made after due notice and opportunity
for hearing; and (5) a bar to any of the Holders of Claims and Interests
asserting any claim released by the Third Party Release against any of the
Debtor Releasees.
 
Nothing in the Confirmation Order or the Plan shall affect a release of any
claim by the United States Government or any of its agencies or any state and
local authority whatsoever, including any claim arising under the Internal
Revenue Code, federal securities laws, the environmental laws or any criminal
laws of the United States or any state and local authority against the Released
Parties, nor shall anything in the Confirmation Order or the Plan enjoin the
United States Government or any of its agencies or any state or local authority
from bringing any claim, suit, action or other proceedings against the Released
Parties for any liability whatever, including without limitation any claim, suit
or action arising under the Internal Revenue Code, federal securities laws, the
environmental laws or any criminal laws of the United States Government or any
of its agencies or any state or local authority, nor shall anything in the
Confirmation Order or the Plan exculpate any party from any liability to the
United States Government or any of its agencies or any state and local authority
whatsoever, including any liabilities arising under the Internal Revenue Code,
federal securities laws, the environmental laws or any criminal laws of the
United States
 
 
 
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Government or any of its agencies or any state and local authority against the
Released Parties.  This paragraph, however, shall in no way affect or limit the
discharge granted to the Debtors under sections 524 and 1141 of the Bankruptcy
Code.  Notwithstanding anything to the contrary herein, the provisions of this
paragraph shall not apply to local franchise authorities.
 
(C)           Exculpation
 
The Exculpated Parties will neither have, nor incur any liability to any Entity
for any Pre-Petition or Post-Petition act taken or omitted to be taken in
connection with, or related to formulating, negotiating, preparing,
disseminating, implementing, administering, confirming or effecting the
Effective Date of the Plan, the Disclosure Statement or any contract,
instrument, release or other agreement or document created or entered into in
connection with the Plan or any other Pre-Petition or Post-Petition act taken or
omitted to be taken in connection with or in contemplation of the restructuring
of the Company; provided, that the foregoing provisions of this exculpation will
have no effect on the liability of any entity that results from any such act or
omission that is determined in a final order to have constituted gross
negligence or willful misconduct; provided, further, that each Exculpated Party
will be entitled to rely upon the advice of counsel concerning his, her or its
duties pursuant to, or in connection with, the Plan; provided still further,
that the foregoing “Exculpation” will not apply to any acts or omissions
expressly set forth in and preserved by the Plan, the Plan Supplement or related
documents, except for acts or omissions of Releasing Parties.
 
Important Securities Law Disclosure
 
Securities Issued in Reliance on Section 1145 of the Bankruptcy Code and
Pursuant to Exemptions under the Securities Act of 1933, as Amended
 
The following securities are being issued under Section 1145 of the Bankruptcy
Code:
 
·  
Warrants (including New Class A Stock underlying such warrants) issued to
Holders of CCH Notes Claims and CIH Notes Claims;

 
·  
New Class A Stock issued to holders of CCH I Notes Claims (other than New Class
A Stock issued to Eligible CCH I Notes Claim Holders pursuant to the Rights
Offering);

 
·  
New CCH II Notes issued (other than the New CCH II Notes issued to the Rollover
Committed Parties and New CCH II Note Commitment Parties); and

 
·  
The New Preferred Stock (and New Common Stock issuable upon redemption thereof).

 
As described in detail below, such securities will be “freely tradeable.”
 
Section 1145(a)(1) of the Bankruptcy Code exempts the offer and sale of
securities under a plan of reorganization from registration under Section 5 of
the Securities Act and state laws when such securities are to be exchanged for
Claims or principally in exchange for Claims and partly for cash.  In general,
securities issued under section 1145 may be resold without registration unless
the recipient is an “underwriter” with respect to those securities. Section
1145(b)(1) of the Bankruptcy Code defines an “underwriter” as any person who:
 
·  
purchases a claim against, an interest in, or a claim for an administrative
expense against the debtor, if that purchase is with a view to distributing any
security received in exchange for such a claim or interest;

 
·  
offers to sell securities offered under a plan of reorganization for the holders
of those securities;

 
·  
offers to buy those securities from the holders of the securities, if the offer
to buy is (i) with a view to distributing those securities; and (ii) under an
agreement made in connection with the plan of reorganization, the completion of
the plan of reorganization, or with the offer or sale of securities under the
plan of reorganization; or

 
 
 
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·  
is an issuer with respect to the securities, as the term “issuer” is defined in
Section 2(a)(11) of the Securities Act.

 
To the extent that persons who receive New Common Stock or New CCH II Notes are
deemed to be “underwriters,” resales by those persons would not be exempted from
registration under the Securities Act or other applicable law by section 1145 of
the Bankruptcy Code. Those persons would, however, be permitted to sell New
Common Stock or other securities without registration if they are able to comply
with the provisions of Rule 144 under the Securities Act, as described further
below.
 
You should confer with your own legal advisors to help determine whether or not
you are an “underwriter.”
 
The following securities are being issued under Section 4(2) of Securities Act:
 
·  
All New Class B Stock;

 
·  
All New Class A Stock issued to Eligible CCH I Notes Claim Holders pursuant to
the Rights Offering;

 
·  
All of the New CCH II Notes issued to the Rollover Commitment Parties and New
CCH II Note Commitment Parties; and

 
·  
All Warrants and New Class A Stock underlying such Warrants that are issued to
Mr. Allen (or his designees).

 
These securities will be “restricted securities” and cannot be sold absent
registration under the Securities Act or pursuant to an exemption
therefrom.  Upon emergence, the Debtors will enter into registration rights
agreements with respect to such “restricted securities” pursuant to which the
Debtors will use their commercially reasonable efforts to (i) register all of
the New Class A Stock that constitute “restricted securities” under the
Securities Act; and (ii) register all of the CCH II Notes that constitute
“restricted securities,” in each case in accordance with the registration rights
agreements that the Debtors will enter into.
 
Voting Instructions
 
This Disclosure Statement, accompanied by a ballot or ballots to be used for
voting on the Plan, is being distributed to the Holders of Claims in Classes
A-3, A-4, B-3, B-4, C-3, C-4, D-3, E-3, E-4, F-3, F-4, G-3, G-4, H-3, H-4, I-5,
J-2 and J-6.  Only the Holders of Claims in these Classes are entitled to vote
to accept or reject the Plan and may do so by completing the ballot and
returning it in the envelope provided.
 
The Debtors, with the approval of the Bankruptcy Court, have engaged Financial
Balloting Group, LLC to serve as the Securities Voting Agent for Claims in
respect of debt securities and Kurtzman Carson Consultants LLC to serve as the
Claims Voting Agent with respect to any other Claims, to assist in the
solicitation process.  The Claims Voting Agent and the Securities Voting Agent
will, among other things, answer questions, provide additional copies of all
solicitation materials, and generally oversee the solicitation process for their
assigned Claims.  The Claims Voting Agent and the Securities Voting Agent will
also process and tabulate ballots for each of their respective Classes that are
entitled to vote to accept or reject the Plan and will file a voting report as
soon as practicable before the Confirmation Hearing.
 
The deadline to vote on the Plan is [●] p.m., E.T., on [●], 2009.
 
BALLOTS
 
Ballots and master ballots must be actually received by the Claims Voting Agent
or Securities Voting Agent, as applicable, by the Voting Deadline by using the
envelope provided, or by first class mail, overnight courier or personal
delivery to:

 
 
 
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For the Claims Voting Agent:
 
Charter Balloting Center
c/o Kurtzman Carson Consultants LLC
2335 Alaska Avenue
El Segundo, CA 90245
 
For the Securities Voting Agent:
 
Charter Balloting Center
c/o Financial Balloting Group, LLC
757 Third Avenue - Third Floor
New York, New York 10017
Attn:  Ballot Processing Center
 
If you received an envelope addressed to your Nominee, please allow enough time
when you return your ballot for your Nominee to cast your vote on a master
ballot before the Voting Deadline.
 
If you have any questions on the procedure for voting on the Plan, please call:
 
 the Claims Voting Agent at the following telephone number:
(866)-967-0266
 
or the Securities Voting Agent at the following telephone number:
(646)-282-1800
as applicable.
 

 
MORE DETAILED INSTRUCTIONS REGARDING HOW TO VOTE ON THE PLAN ARE CONTAINED ON
THE BALLOTS DISTRIBUTED TO HOLDERS OF CLAIMS AND INTERESTS THAT ARE ENTITLED TO
VOTE ON THE PLAN.  FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE COMPLETED,
SIGNED AND RECEIVED BY [●] P.M. (EASTERN TIME), ON [●], 2009.
 
ANY BALLOT THAT IS PROPERLY EXECUTED BY THE HOLDER OF A CLAIM OR INTEREST, BUT
WHICH DOES NOT CLEARLY INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN OR WHICH
INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF THE PLAN, SHALL NOT BE COUNTED.
 
EACH HOLDER OF A CLAIM AND/OR INTERESTS MAY CAST ONLY ONE BALLOT PER EACH SUCH
CLAIM OR INTEREST HELD.  BY SIGNING AND RETURNING A BALLOT, EACH HOLDER OF A
CLAIM OR INTEREST IN CLASSES A-3, A-4, B-3, B-4, C-3, C-4, D-3, E-3, E-4, F-3,
F-4, G-3, G-4, H-3, H-4, I-5, J-2 AND J-6 WILL CERTIFY TO THE BANKRUPTCY COURT
AND THE DEBTORS THAT NO OTHER BALLOTS WITH RESPECT TO SUCH CLAIM AND/OR INTEREST
HAVE BEEN CAST OR, IF ANY OTHER BALLOTS HAVE BEEN CAST WITH RESPECT TO SUCH
CLASS OF CLAIMS AND/OR INTEREST, SUCH EARLIER BALLOTS ARE THEREBY SUPERSEDED AND
REVOKED.
 
ALL BALLOTS ARE ACCOMPANIED BY RETURN ENVELOPES.  IT IS IMPORTANT TO FOLLOW THE
SPECIFIC INSTRUCTIONS PROVIDED ON EACH BALLOT.
 
 
 
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FOR NOMINEES:
 
With respect to Claims in Classes A-4, E-4, F-4, G-4, H-4, the Debtors will
deliver ballots to Nominees.
 
The Nominees should deliver the Ballot and other documents relating to the Plan,
including this Disclosure Statement, to each Beneficial Owner (as defined in the
Disclosure Statement Order) for which they serve as Nominee.
 
The Nominee should forward the solicitation materials to each Beneficial Owner
for voting and include a return envelope provided by and addressed to the
Nominee so that the Beneficial Owner may return the completed Beneficial Owner
Ballot to the Nominee.  Upon receipt of the ballots, the Nominee will summarize
the individual votes of its respective Beneficial Owners on the appropriate
Master Ballot and then return the Master Ballot to the Securities Voting Agent
before the Voting Deadline.
 
If a Master Ballot is received after the Voting Deadline, the votes and
elections on such Master Ballot will not be counted.  A Master Ballot should be
sent to the Securities Voting Agent by the envelope provided, or by First Class
Mail, Overnight Courier or Personal Delivery.  In all cases, sufficient time
should be allowed to assure timely delivery.  No Ballot should be sent to the
Debtors, the Debtors’ financial or legal advisors, but only to the Securities
Voting Agent as set forth above.
 
Nominees must provide appropriate information for each of the items on the
Master Ballot, including without limitation, identifying the votes to accept or
reject the Plan.
 
By returning a Master Ballot, each Nominee will be certifying to the Debtors and
the Bankruptcy Court, among other things, that:
 
·  
it has received a copy of the Disclosure Statement and other solicitation
materials annexed to the Disclosure Statement, and it has delivered the same to
the Beneficial Owners such Nominee represents;

 
·  
it has received a completed and signed Ballot from each Beneficial Owner whose
vote is reflected on such Master Ballot;

 
·  
it is a bank, broker or other nominee (or agent thereof) that holds the
securities being voted on behalf of the Beneficial Owners identified on such
Master Ballot;

 
·  
it has properly disclosed (a) the number of such Beneficial Owners, (b) the
amount of securities owned by each such Beneficial Owner, (c) each Beneficial
Owner’s respective vote, if any, concerning the Plan and (d) the customer
account, serial number and/or identification number for each such Beneficial
Owner;

 
·  
each such Beneficial Owner has certified to the Nominee that such Beneficial
Owner has not submitted any other ballots for such Claims held in other accounts
or other names, or, if it has submitted another Ballot held in other accounts or
names, that the Beneficial Owner has certified to the Nominee that such
Beneficial Owner has cast the same vote for such Claims, and the undersigned has
identified such other accounts or Owner and such other ballots;

 
·  
it has been authorized by each such Beneficial Owner to vote on the Plan; and

 
·  
it will maintain the original Beneficial Owner Ballot returned by each
Beneficial Owner (whether properly completed or defective) for one year after
the Voting Deadline (or such other date as is set by subsequent Bankruptcy Court
order) for disclosure to the Bankruptcy Court or the Debtor, if so ordered.

 
Each Master Ballot must be returned in sufficient time to allow it to be
RECEIVED by the Securities Voting Agent by no later than [●] p.m. (Eastern Time)
on the date of the Voting Deadline.
 
 
 
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Certain U.S. Federal Income Tax
Consequences Of The Plan
 
The following is a summary of certain U.S. federal income tax consequences of
the Plan to the Reorganized Company and Holders of Allowed Claims.  This summary
is based on the IRC, Treasury Regulations thereunder, and administrative and
judicial interpretations and practice, all as in effect on the date of the
Disclosure Statement and all of which are subject to change, with possible
retroactive effect.  Due to the lack of definitive judicial and administrative
authority in a number of areas, substantial uncertainty may exist with respect
to some of the tax consequences described below.  No opinion of counsel has been
obtained as to any of the tax consequences of the Plan discussed
below.  Although the Debtors intend to seek a private letter ruling from the IRS
as to certain aspects of the Plan, the scope of the intended ruling is narrow
and will not address most of the tax consequences of the Plan discussed
below.  There can be no assurance that the IRS will not challenge one or more of
the tax consequences of the Plan described below.
 
This summary does not apply to Holders of Allowed Claims that are not “United
States persons” (as such term is defined in the IRC) or that are otherwise
subject to special treatment under U.S. federal income tax law (including, for
example, banks, governmental authorities or agencies, financial institutions,
insurance companies, pass-through entities, tax-exempt organizations, brokers
and dealers in securities, mutual funds, small business investment companies,
and regulated investment companies).  The following discussion assumes that
Holders of Allowed Claims hold such Claims as “capital assets” within the
meaning of section 1221 of the IRC.  Moreover, this summary does not purport to
cover all aspects of U.S. federal income taxation that may apply to the Debtors
and Holders of Allowed Claims based upon their particular
circumstances.   Additionally, this summary does not discuss any tax
consequences that may arise under any laws other than U.S. federal income tax
law, including under state, local, or foreign tax law.
 
The following summary is not a substitute for careful tax planning and advice
based on the particular circumstances of each Holder of a Claim.  Each Holder of
a Claim is urged to consult his, her, or its tax advisors with respect to the
U.S. federal income tax consequences, as well as other tax consequences,
including under any applicable state, local, and foreign law, of the
restructuring described in the Plan.  This discussion does not address special
consideration that may be applicable to Holders holding more than one class of
Claims.  Such Holders should consult their tax advisors with respect to their
particular circumstances.
 
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by
the IRS, any tax advice contained in this Disclosure Statement is not intended
or written to be used, and cannot be used, by any taxpayer for the purpose of
avoiding tax-related penalties under the IRC.  The tax advice contained in this
Disclosure Statement was written to support the promotion or marketing of the
transactions described in this Disclosure Statement. Each taxpayer should seek
advice based on the taxpayer’s particular circumstances from an independent tax
advisor.
 
 Certain U.S. Federal Income Tax Consequences to Reorganized Company
 
 Cancellation of Debt and Reduction of Tax Attributes
 
In general, absent an exception, a debtor will realize and recognize
cancellation of debt income (“COD Income”) upon satisfaction of its outstanding
indebtedness for total consideration less than the amount of such indebtedness.
The amount of COD Income, in general, is the excess of (a) the adjusted issue
price of the indebtedness satisfied over (b) the sum of (x) the amount of cash
paid and (y) the fair market value of any new consideration (including stock of
the debtor) given in satisfaction of such indebtedness at the time of the
exchange.
 
A debtor will not, however, be required to include any amount of COD Income in
gross income if the debtor is under the jurisdiction of a court in a case under
Chapter 11 of the Bankruptcy Code and the discharge of debt occurs pursuant to
that proceeding. Instead, as a consequence of such exclusion, a debtor must
reduce its tax attributes by the amount of COD Income that it excluded from
gross income under section 108 of the IRC. In general, tax attributes will be
reduced in the following order: (a) NOLs; (b) most tax credits and capital loss
carryovers; (c) tax basis in assets; and (d) foreign tax credits. A debtor with
COD Income may elect first to reduce the basis of its depreciable assets under
section 108(b)(5) of the IRC.
 
 
 
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As a result of the Plan, the Debtors’ aggregate existing indebtedness will be
substantially reduced and the Reorganized Company will therefore have COD
Income, which will be excluded from gross income under the rules discussed
above.  Because the Plan provides that Holders of certain Allowed Claims will
receive New Class A Stock, the amount of COD Income, and accordingly the amount
of tax attributes required to be reduced, will depend on the fair market value
of the New Class A Stock exchanged therefor. This value cannot be known with
certainty until after the Effective Date.  However, the Debtors expect that,
subject to the limitations discussed herein, the Reorganized Company will
continue to have significant NOL carryovers and certain other tax attributes
remaining after emergence.
 
A recently enacted amendment to the COD Income rules provides that taxpayers,
including taxpayers operating under the jurisdiction of a court in a case under
Chapter 11 of the Bankruptcy Code, that recognize COD Income in 2009 or 2010 may
elect to forgo the COD Income exclusion and attribute reduction rules described
above.  Instead, the taxpayer may elect to take into taxable income the COD
Income with respect to such debt in equal installments in 2014 through 2018
(i.e., the taxpayer would report 20% of the COD Income in each such year).  This
election to defer COD Income is made separately with respect to each debt
instrument on which COD Income is realized, must be made on the taxpayer’s tax
return for the year that includes the transaction that creates the COD Income,
and, in the case of debt of a partnership, is made at the partnership
level.  The Debtors do not intend to elect to apply this new rule.
 
Because of the unique organizational structure of the Debtors, most of the COD
Income that will be generated from the Plan will occur at Holdco and its
subsidiaries (which are generally disregarded entities for U.S. federal income
tax purposes).  This COD Income will be allocated to the two members of Holdco
(CCI and CII) based on their respective percentage ownership interests in
Holdco.  The Debtors expect that this means that approximately 54% of the COD
Income will be allocated to CCI and 46% to CII.   This allocation formula is one
of the principal tax reasons for retaining the Holdco structure, since the
allocation of COD income to CII is expected to result in several billion dollars
of NOL carryforwards being preserved at the CCI level.  If Holdco were dissolved
or liquidated before the Effective Date, all of the COD Income could potentially
be allocated to CCI, thereby eliminating most of CCI's NOL carryforwards.  There
is therefore a material tax benefit to the Debtors of preserving the existing
Holdco structure.  The Allen Entities have the right post-Effective Date to
exchange their interest in Holdco for CCI, but the Allen Entities are under no
obligation to do so and it is uncertain whether they will do so.
 
Under the U.S. federal income tax rules dealing with COD Income, the tax
treatment of that income will be determined with respect to each of CCI and CII
at the member level.  Because CCI is in bankruptcy, COD income allocated to CCI
will not be included in income, but it will result in a reduction in CCI's NOL
carryforwards after the Effective Date.  Because CCI is primarily just a holding
company, the NOL carryforwards that will be preserved at CCI will generally be
usable only to the extent that Holdco and the direct and indirect subsidiaries
of Holdco have taxable income in the future; such NOL carryforwards would not
have any future value to CCI if CCI were not to reorganize in a Chapter 11
proceeding,.  And because of the “ownership change” limitations discussed below,
it is generally the case that any NOL carryforwards at CCI could not be utilized
by CCI if CCI were a standalone company without its ownership interest in Holdco
and Holdco’s subsidiaries.
 
 Limitation of Net Operating Loss Carryforwards and Other Tax Attributes
 
The precise amount of the NOL carryforwards and other tax attributes that will
be available to the Reorganized Company at emergence is based on a number of
factors and is impossible to calculate at this time. Some of the factors that
will impact the amount and utilization of the NOLs include the following: (a)
the amount of tax losses incurred by the Debtors through emergence; (b) the
value of the New Class A Stock; (c) the amount of COD Income incurred by the
Debtors in connection with the Effective Date; and (d) the allocation of COD
Income between CII and CCI.
 
Following the Effective Date, the Debtors anticipate that any remaining NOL and
tax credit carryovers and, possibly, certain other tax attributes of the
Reorganized Company allocable to periods prior to and including the Effective
Date (collectively, “Pre-Change Losses”) will be subject to a limitation under
section 382 of the IRC as a result of an “ownership change” of CCI by reason of
the transactions pursuant to the Plan.  Under section 382 of the IRC, if a
corporation undergoes an “ownership change,” the amount of its Pre-Change Losses
that may be utilized to offset future taxable income generally is subject to an
annual limitation.  As discussed more fully below, the Debtors anticipate that
the issuance of the New Class A Stock pursuant to the Plan will result in an
“ownership change” of
 
 
 
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CCI for these purposes and that the Reorganized Company’s use of its NOL
carryovers will be subject to limitation unless an exception to the general
rules of section 382 of the IRC applies.
 
 General Section 382 Annual Limitation
 
In general, the amount of the annual limitation to which a corporation that
undergoes an “ownership change” would be subject is equal to the product of (i)
the fair market value of the stock of the corporation immediately before the
“ownership change” (with certain adjustments) and (ii) the “long-term tax-exempt
rate” in effect for the month in which the “ownership change” occurs (4.61% for
ownership changes occurring in May 2009).  Any unused limitation may be carried
forward, thereby increasing the annual limitation in the subsequent taxable
year.  Additionally, if the assets of a corporation experiencing an ownership
change have a fair market value greater than their tax basis (a “net unrealized
built-in gain”), the corporation is permitted to increase its annual section 382
limitation during the five years immediately after the “ownership change” by an
amount equal to the depreciation deductions that a hypothetical purchaser of the
corporation’s assets would have been permitted to claim if it had acquired the
corporation’s assets in a taxable transaction.  Additionally, Section 383 of the
IRC applies a similar limitation to capital loss carryforwards and tax
credits.  The Debtors expect to request a private letter ruling from the IRS
respecting the methodology by which the annual limitation after an ownership
change should be calculated.  Due to the Debtors’ organizational structure, the
calculation of such limitation amount is unusually complex and thus the Debtors
have determined it would be appropriate to seek an IRS ruling.
 
 Special Bankruptcy Exceptions
 
An exception to the foregoing annual limitation rules generally applies when
so-called “qualified creditors” and continuing shareholders of a debtor company
in Chapter 11 receive, in respect of their claims, at least 50% of the vote and
value of the stock of the reorganized debtor (or a controlling corporation if
also in Chapter 11) pursuant to a confirmed Chapter 11 plan (the “382(l)(5)
Exception”). Under the 382(l)(5) Exception, a debtor’s Pre-Change Losses are not
limited on an annual basis but, instead, are required to be reduced by the
amount of any interest deductions claimed during the three taxable years
preceding the effective date of the plan of reorganization, and during the part
of the taxable year prior to and including the effective date of the plan of
reorganization, in respect of all debt converted into stock in the
reorganization. If the 382(l)(5) Exception applies and a debtor undergoes
another ownership change within two years the debtor’s Pre-Change Losses
effectively would be eliminated in their entirety.
 
Where the 382(l)(5) Exception is not applicable (either because the debtor does
not qualify for it or the debtor elects not to utilize the 382(l)(5) Exception),
a second special rule will generally apply (the “382(l)(6) Exception”). When the
382(l)(6) Exception applies, a debtor corporation that undergoes an “ownership
change” generally is permitted to determine the fair market value of its stock
after taking into account the increase in value resulting from any surrender or
cancellation of creditors’ claims in the bankruptcy. This differs from the
ordinary rule that requires the fair market value of a debtor corporation that
undergoes an “ownership change” to be determined before the events giving rise
to the change. The 382(l)(6) Exception also differs from the 382(l)(5) Exception
in that (i) the debtor corporation is not required to reduce its NOLs by the
amount of interest deductions claimed within the prior three-year period and
(ii) the debtor may undergo another ownership change within two years without
triggering the elimination of its NOLs.  Whether a debtor takes advantage of the
382(l)(5) Exception or the 382(l)(6) Exception, the debtor’s use of the
Pre-Change Losses may be adversely affected if the debtor were to undergo
another ownership change.
 
The Debtors believe that the CCI ownership change resulting from the Effective
Date is unlikely to qualify for the 382(l)(5) Exception.  Accordingly, the
Debtors expect that the use of the Reorganized Company’s NOL carryforwards will
be subject to limitation based on the rules discussed above, but taking into
account the 382(l)(6) Exception.  The exact amount of the benefits from the
application of the 382(l)(6) Exception in these circumstances is not entirely
clear, because the amount of such benefits will depend primarily on the value
inherent in Holdco and its subsidiaries and the methodology by which such value
is determined.  Accordingly, the Debtors intend to request a private letter
ruling from the IRS with respect to the application of the 382(l)(6) Exception
to the ownership change arising from Effective Date.  Further, while the
Debtors’ analysis continues, they believe the Reorganized Company may have a net
unrealized built-in gain on its assets, and, accordingly, its ability to utilize
its Pre-Change Losses to offset its taxable income under section 382 of the IRC
following the Effective Date may be significantly enhanced.
 
 
 
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Restrictions on Resale of Securities to Protect NOLs
 
The Debtors expect the Reorganized Company to emerge from Chapter 11 with
valuable tax attributes, including NOL carryforwards. As discussed above, the
Reorganized Company’s ability to utilize these tax attributes could be subject
to a greater limitation if another ownership change were to occur after
emergence.  To reduce the risk of an ownership change that might impose such a
limitation, the Amended and Restated Certificate of Incorporation will include
special provisions designed to permit the Board of Directors to impose certain
restrictions on trading with respect to New Class A Stock.  These special
provisions are described above in “Important Aspects of the Plan — Other
Provisions,” which begins on page 31.
 
 Alternative Minimum Tax
 
In general, an alternative minimum tax (“AMT”) is imposed on a corporation’s
alternative minimum taxable income (“AMTI”) each year at a 20% rate to the
extent such tax exceeds the corporation’s regular federal income tax for such
year. AMTI is generally equal to regular taxable income with certain
adjustments. For purposes of computing AMTI, certain tax deductions and other
beneficial allowances are modified or eliminated. For example, even though for
regular tax purposes a corporation might otherwise be able to offset all of its
taxable income by NOL carryovers from prior years, only 90% of a corporation’s
AMTI may be offset by available alternative tax NOL carryforwards. This rule
could cause certain Reorganized Debtors to owe federal and state income tax on
taxable income in future years even though NOL carryforwards are available to
offset regular taxable income.
 
Additionally, if a corporation undergoes an “ownership change” within the
meaning of section 382 of the IRC, the section 382 rules discussed above also
apply to its NOL carryforwards for AMT purposes.  Any AMT tax that a corporation
pays is generally allowed as a nonrefundable credit against its regular U.S.
federal income tax liability in future taxable years to the extent that the
corporation is no longer subject to AMT.
 
 Certain U.S. Federal Income Tax Consequences to the Holders of Allowed Claims
 
For U.S. federal income tax purposes, nearly all of Holdco’s direct and indirect
subsidiaries are treated as “disregarded” entities.  As a result, holders of
Allowed Claims against those direct and indirect subsidiaries are treated as
though they held claims against Holdco for U.S. federal income tax
purposes.  The discussion below generally assumes therefore that Holdco and each
of its direct and indirect subsidiaries are treated as one company for these
purposes.
 
 Consequences to Holders of Allowed Secured Claims
 
Pursuant to the Plan, each Holder of an Allowed Secured Claim will either (i)
have its Claim Reinstated, (ii) be paid in full in cash, or (iii) have all
collateral securing such Claim returned.
 
If a Holder of an Allowed Secured Claim receives cash or has all collateral
securing such Claim returned in satisfaction of its Claim, the satisfaction
should be treated as a taxable exchange under section 1001 of the IRC. The
Holder should recognize capital gain or loss (which capital gain or loss should
be long-term capital gain or loss if the Holder has held its Claim for more than
one year) (subject to the “market discount” rules described below) equal to the
difference between (x) the amount of cash or the fair market value of other
property received and (y) the Holder’s adjusted tax basis in its Claim. To the
extent that the cash or property received in the exchange is allocable to
accrued interest that has not already been taken into income by the Holder, the
Holder may recognize ordinary interest income. If an Allowed Secured Claim is
Reinstated, the Holder of such Claim should not recognize gain or loss except to
the extent collateral securing such Claim is changed and the change in
collateral constitutes a “significant modification” of the Allowed Secured Claim
within the meaning of the Treasury Regulations promulgated under section 1001 of
the IRC.
 
 Consequences to Holders of Allowed CCI Note Claims
 
Pursuant to the Plan, each Holder of an Allowed CCI Note Claim will receive its
Pro Rata share of (i) shares of New Preferred Stock and (ii) cash in the amount
determined under the Plan.
 
 
 
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The U.S. federal income tax consequences to a Holder arising from the exchange
of an Allowed CCI Note Claim for cash and New Preferred Stock will depend, in
part, on whether the CCI Note Claims each constitute a “security” for U.S.
federal income tax purposes.  Whether a debt instrument constitutes a “security”
is determined based on all the relevant facts and circumstances, but most
authorities have held that the length of the term of a debt instrument is an
important factor in determining whether such instrument is a security for U. S.
federal income tax purposes.  These authorities have indicated that a term of
less than five years is evidence that the instrument is not a security, whereas
a term of ten years or more is evidence that it is a security. There are
numerous other factors that could be taken into account in determining whether a
debt instrument is a security, including the security for payment, the
creditworthiness of the obligor, the subordination or lack thereof to other
creditors, the right to vote or otherwise participate in the management of the
obligor, convertibility of the instrument into an equity interest of the
obligor, whether payments of interest are fixed, variable or contingent, and
whether such payments are made on a current basis or accrued.  Each Holder of a
Claim should consult with its tax advisor to determine whether or not the debt
underlying such Claim is a “security” for U.S. federal income tax purposes.
 
If a Holder’s Allowed CCI Note Claim constitutes a security for U.S. federal
income tax purposes, the exchange of such Claim for cash and the New Preferred
Stock should be characterized as a reorganization for U.S. federal income tax
purposes.  Holders of Allowed CCI Note Claims may be required to recognize gain,
but not loss, on the exchange.  Specifically, a Holder may recognize (a) capital
gain, subject to the market discount rules discussed below, to the extent of the
lesser of (i) the amount of gain realized on the exchange and (ii) the amount of
cash received, and (b) gain or loss with respect to accrued interest, as
described below.  In such case, a Holder should obtain a tax basis in the New
Preferred Stock equal to the tax basis of the surrendered CCI Note, increased by
the amount of gain recognized and decreased by the amount of cash received;
provided that the tax basis of any New Preferred Stock that is treated as
received in satisfaction of accrued interest should equal the amount of such
accrued interest.  A Holder’s holding period for its New Preferred Stock
received should include such Holder’s holding period for the surrendered CCI
Note; provided that the holding period for any New Preferred Stock that is
treated as received in satisfaction of accrued interest should begin on the day
following the Effective Date.
 
If a Holder’s Allowed CCI Note Claim does not constitute a security for U.S.
federal income tax purposes, the exchange of such Claim for cash and the New
Preferred Stock will constitute a taxable exchange under Section 1001 of the
IRC.  Accordingly, such Holder should recognize gain or loss equal to the
difference between (1) the amount of cash received and the value of the New
Preferred Stock received and (2) the Holder’s adjusted basis in its Allowed CCI
Note Claim.  The character of such gain or loss as capital gain or loss or as
ordinary income or loss will be determined by a number of factors, including the
tax status of the Holder, the nature of the Claim in the Holder’s hands, whether
the Claim was purchased at a discount, the amount of accrued interest, and
whether and to what extent the Holder has previously claimed a bad debt
deduction with respect to its Claim.  The U.S. federal income tax consequences
of market discount and the receipt of cash allocable to accrued interest are
summarized below.  A Holder’s basis in the New Preferred Stock will equal its
fair market value as of the Effective Date, and a Holder’s holding period for
its New Preferred Stock will begin on the day following the Effective Date.
 
To the extent the Reorganized Company has positive earnings and profits for U.S.
federal income tax purposes in the future, there is a risk that a holder of New
Preferred Stock will be required to include in taxable income an amount equal to
the accrued but unpaid yield on the New Preferred Stock, even if no dividends
are paid in cash.  The tax consequences of owning New Preferred Stock that does
not pay a regular cash dividend is complex; holders of New Preferred Stock
should consult their own tax advisor regarding such consequences.
 
 Consequences to Holders of Allowed CCH Note Claims and Allowed CIH Note Claims
 
Pursuant to the Plan, each Holder of an Allowed CCH Note Claim or an Allowed CIH
Note Claim will receive its Pro Rata share of Warrants to purchase shares of New
Class A Stock in the aggregate amount determined under the Plan.
 
Holders of Allowed CCH Note Claims and Allowed CIH Note Claims may recognize
gain or loss on the exchange of such Claims for Warrants to purchase New Class A
Stock. Although certain of such Claims may constitute securities, the exchange
of such Claims for Warrants to purchase New Class A Stock will not qualify as a
tax-free reorganization because such Claims were issued by various subsidiaries
of CCI and will be exchanged for equity in CCI. Accordingly, each Holder of such
a Claim may recognize gain or loss equal to the difference between: (i) the fair
market value of the Warrants to purchase New Class A Stock (as of the date the
Warrants are
 
 
 
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distributed to the Holder) received in exchange for the Claim and (ii) the
Holder’s adjusted basis in the Claim. Such gain or loss should be capital in
nature so long as the Claim is held as a capital asset (subject to the “market
discount” rules described below) and should be long-term capital gain or loss if
the Claim was held for more than one year. To the extent that a portion of the
Warrants received in exchange for a Claim is allocable to accrued but untaxed
interest, the Holder may recognize ordinary income. A Holder’s tax basis in the
Warrants received should equal the fair market value of the Warrants as of the
date distributed to the Holder, and a Holder’s holding period for the Warrants
should begin on the day following the Effective Date.
 
 Consequences to Holders of Allowed CCH II Notes Claims
 
Pursuant to the Exchange, each Holder of an Allowed CCH II Note Claim will
exchange such Holder’s CCH II Note for one of the following:  (i) a New CCH II
Note, (ii) cash, or (iii) both a New CCH II Note and cash.
 
The U.S. federal income tax consequences of the exchange of a CCH II Note for a
New CCH II Note will depend on whether the exchange results in a “significant
modification” of the CCH II Note (i.e., whether the terms of the New CCH II
Notes are significantly different from the terms of the CCH II Notes exchanged
therefor).  The Treasury Regulations under section 1001 of the IRC provide
specific rules for determining whether certain modifications are
“significant.”  One such rule provides that a change in the annual yield of an
instrument will be considered “significant” if the modified rate varies from the
original rate by more than the greater of (a) 25 basis points and (b) 5 percent
of the annual yield of the unmodified instrument.  Because the New CCH II Notes
will bear an interest rate that exceeds the interest rate payable with respect
to the CCH II Notes by more than such amount, the Exchange should result in a
significant modification of the CCH II Notes.  Therefore, the exchange of CCH II
Notes for New CCH II Notes and/or cash should be a taxable exchange under
section 1001 of the IRC.
 
A Holder who receives New CCH II Notes and/or cash with respect to an Allowed
CCH II Note Claim will generally recognize income, gain or loss for U.S. federal
income tax purposes in an amount equal to the difference between (a) the sum of
(i) the fair market value of any New CCH II Notes received and (ii) the amount
of any cash received and (b) the Holder’s adjusted basis in its Allowed CCH II
Note Claim.  Such gain or loss may be capital in nature (subject to the “market
discount” rules described below) and may be long-term capital gain or loss if
the CCH II Notes were held for more than one year.  To the extent that a portion
of the cash or New CCH II Notes received represents accrued but unpaid interest
that the Holder has not already taken into income, the Holder may recognize
ordinary interest income.  A Holder’s tax basis in any New CCH II Notes received
should equal the fair market value of the New CCH II Notes as of the date
distributed to the Holder, and a Holder’s holding period for the New CCH II
Notes should begin on the day following the Exchange.
 
The tax consequences with respect to an exchange of CCH II Notes (including with
respect to accrued but unpaid interest) are complex and each Holder of such
notes should consult with its own tax advisor.
 
 Consequences to Holders of Allowed CCH I Note Claims
 
Pursuant to the Plan, each Holder of an Allowed CCH I Note Claim will receive
its Pro Rata share of New Class A Stock in the aggregate amount determined under
the Plan.  Additionally, certain Holders of Allowed CCH I Note Claims will also
receive Rights pursuant to the Rights Offering.
 
Although certain of such Claims may constitute securities, the exchange of such
Claims for New Class A Stock (and, with respect to certain Holders, Rights) will
not qualify as a tax-free reorganization because such Claims were issued by
various subsidiaries of CCI and will be exchanged for equity in CCI.
 
A Holder of an Allowed CCH I Note Claim will generally recognize income, gain or
loss for U.S. federal income tax purposes in an amount equal to the difference
between (a) the sum of (i) the fair market value of the New Class A Stock
received and (ii) the fair market value of any Rights received, and (b) the
Holder’s adjusted basis in its Allowed CCH I Note Claim.  Such gain or loss
should be capital in nature (subject to the “market discount” rules described
below) and should be long-term capital gain or loss if the CCH I Note was held
for more than one year.  To the extent that a portion of the New Class A Stock
received represents accrued but unpaid interest that the Holder has not already
taken into income, the Holder may recognize ordinary interest income.  A
Holder’s basis in its New Class A Stock will equal its fair market value as of
the Effective Date, and a Holder’s holding period for its New Class A Stock will
begin on the day following the Effective Date.
 
 
 
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Consequences to Holders of New CCH II Notes
 
Stated interest on the New CCH II Notes will generally be taxable to a holder of
New CCH II Notes as ordinary income at the time the interest is paid or accrues
in accordance with the holder’s method of accounting for U.S. federal income tax
purposes.  A holder of New CCH II Notes generally will be required to report the
excess of the stated principal amount of the New CCH II Notes over the issue
price of the New CCH II Notes as original issue discount on the New CCH II Notes
on a constant yield basis over the term of the New CCH II Notes.
 
A holder will generally recognize capital gain or loss upon the sale, exchange,
redemption or other taxable disposition of a New CCH II Note equal to the
difference between the amount realized (less any accrued but unpaid interest,
which generally will be taxable as such) and the holder’s adjusted tax basis in
the note.  A noncorporate holder who has held the note for more than one year
generally will be subject to reduced rates of taxation on such gain.  The
ability to deduct capital losses may be limited.
 
 Consequences to Participants in the Rights Offering
 
A holder of Rights generally should not recognize taxable gain or loss upon the
exercise of such Rights. The tax basis in the New Class A Stock received upon
exercise of the Rights should equal the sum of the holder’s tax basis in the
Rights and the amount paid for such New Class A Stock. The holding period in
such New Class A Stock received should commence the day following its
acquisition.
 
 Accrued But Untaxed Interest
 
A portion of the consideration (whether cash, stock, debt or other
consideration) received by Holders of Claims and Interests may be attributable
to accrued but untaxed interest on such Claims. Such amount should be taxable to
that Holder as interest income if such accrued interest has not been previously
included in the Holder’s gross income for U.S. federal income tax
purposes.  Conversely, a holder generally recognizes a deductible loss to the
extent any accrued interest claimed was previously included in income and is not
paid in full.
 
If the fair value of the consideration received by Holders of Claims and
Interests is not sufficient to fully satisfy all principal and interest on
Allowed Claims, the extent to which such consideration will be attributable to
accrued but untaxed interest is unclear.  Holders of Claims and Interests should
consult their tax advisors regarding the proper allocation of the consideration
received by them under the Plan.
 
 Market Discount
 
As indicated above, certain Holders of Allowed Claims may be affected by the
“market discount” provisions of sections 1276 through 1278 of the IRC. Under
these rules, some or all of the gain realized by a Holder may be treated as
ordinary income (instead of capital gain) to the extent of the amount of accrued
“market discount” on such Holder’s Allowed Claim.
 
In general, a debt obligation with a fixed maturity of more than one year that
is acquired by a holder on the secondary market (or, in certain circumstances,
upon original issuance) is considered to be acquired with “market discount” as
to that holder if the debt obligation’s stated redemption price at maturity (or
revised issue price as defined in section 1278 of the IRC, in the case of a debt
obligation issued with original issue discount) exceeds the tax basis of the
debt obligation in the holder’s hands immediately after its acquisition.
However, a debt obligation is not a “market discount bond” if such excess is
less than a statutory de minimis amount (equal to 0.25 percent of the debt
obligation’s stated redemption price at maturity or revised issue price, in the
case of a debt obligation issued with original issue discount, multiplied by the
number of complete years remaining until maturity at the time of the
acquisition).
 
Any gain recognized by a Holder on the taxable disposition of an Allowed Claim
(determined as described above) that was acquired with market discount should be
treated as ordinary income to the extent of the market discount that accrued
thereon while the Allowed Claim was considered to be held by the Holder (unless
the Holder elected to include market discount in income as it accrued). To the
extent that any Allowed Claims that were acquired with market discount are
exchanged in a tax-free transaction for other property, any market discount that
accrued on the Allowed Claims (i.e., up to the time of the exchange) but was not
recognized by the Holder is carried
 
 
 
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over to the property received therefore, and any gain recognized on a subsequent
sale, exchange, redemption or other disposition of such property is treated as
ordinary income to the extent of such accrued market discount.
 
 Information Reporting and Backup Withholding
 
In general, information reporting requirements may apply to distributions or
payments under the Plan. Additionally, under the backup withholding rules, a
Holder of a Claim may be subject to backup withholding (currently at a rate of
28%) with respect to distributions or payments made pursuant to the Plan unless
that Holder: (a) comes within certain exempt categories (which generally include
corporations) and, when required, demonstrates that fact; or (b) provides a
correct taxpayer identification number and certifies under penalty of perjury
that the taxpayer identification number is correct and that the Holder is not
subject to backup withholding because of a failure to report all dividend and
interest income. Backup withholding is not an additional tax, but merely an
advance payment that may be refunded to the extent it results in an overpayment
of tax, provided that the required information is provided to the IRS.
 
The Debtors will withhold all amounts required by law to be withheld from
payments of interest. The Debtors will comply with all applicable reporting
requirements of the IRC.
 
The U.S. federal income tax consequences of the Plan are complex.  The foregoing
summary does not discuss all aspects of U.S. federal income taxation that may be
relevant to a particular Holder of a Claim in light of such Holder’s
circumstances and income tax situation.  All Holders of Claims against the
Debtors should consult with their tax advisors as to the particular tax
consequences to them of the transactions contemplated by the restructuring,
including the applicability and effects of any state, local, or foreign tax
laws, and any change in applicable tax laws.
 
 
 
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Recommendation
 
The Debtors believe that the Plan is in the best interests of all Holders of
Claims and Interests and urge all Holders of Claims and Interests entitled to
vote to accept the Plan and to evidence such acceptance by returning their
ballots or master ballots so that they will be received by the Debtors’ Voting
Agent no later than ____________.
 
Dated:  [●], 2009
 
             Respectfully submitted,
 
             CHARTER COMMUNICATIONS, INC.
             (for itself and on behalf of each of the Debtors, other than
             Charter Investment, Inc.)
 
 
By:
 

 
Name:

 
Title:

Prepared by:
 
KIRKLAND & ELLIS LLP
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
(212) 446-4800 (telephone)
 
ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION (OTHER THAN CHARTER INVESTMENT,
INC.)
 
             CHARTER INVESTMENT, INC.
 
 
By:
 

 
Name:

 
Title:

Prepared by:
 
TOGUT, SEGAL & SEGAL LLP
One Penn Plaza
New York, New York 10119
(212) 594-5000 (telephone)
 
ATTORNEYS FOR THE DEBTOR AND DEBTOR IN POSSESSION CHARTER INVESTMENT, INC.
 
 
 
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EXHIBIT A
 
PLAN OF REORGANIZATION
 
 
 
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EXHIBIT B
 
DISCLOSURE STATEMENT ORDER
 
 
 
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EXHIBIT C
 
REORGANIZED DEBTORS’ PROJECTIONS
 
 
 
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EXHIBIT D
 
REORGANIZED DEBTORS’ VALUATION
 
 
 
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EXHIBIT E
 
LIQUIDATION ANALYSIS
 
 
 
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EXHIBIT F
 
RECONCILIATION OF NON-GAAP MEASURES
 
 
 
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