Charter Communications, Inc. (NASDAQ: CHTR) and its subsidiaries
(�Charter� or the �Company�) today commenced the next phase of its
previously announced financial restructuring, which is expected to
reduce the Company�s debt by approximately $8 billion. As announced
on February 12, 2009, the Company reached agreements-in-principle
with members of a committee of certain of the Company�s debt
holders (collectively, the �Bondholder Committee�). These
agreements-in-principle contemplate the investment by members of
the Bondholder Committee of more than $3 billion, including up to
$2 billion in equity proceeds, $1.2 billion in roll-over debt and
$267 million in new debt to support the overall refinancing.
Charter expects the proposed restructuring to position the Company
to generate positive free cash flow through significant interest
expense reductions. The Company has been working closely with the
Bondholder Committee to finalize a pre-arranged plan of
reorganization and related documents and agreements based upon the
agreements-in-principle (the �Pre-Arranged Plan�).
Consistent with the terms of the agreements-in-principle,
Charter today filed its Pre-Arranged Plan and Chapter 11 petitions
in the United States Bankruptcy Court for the Southern District of
New York. Charter�s Pre-Arranged Plan is supported by Paul G. Allen
and affiliates of Paul G. Allen and by the Bondholder Committee
consisting of (a) parties holding approximately 73% in principal
amount of the 11.00% Senior Secured Notes due 2015 of CCH I, LLC
and (b) parties holding approximately 52% in principal amount of
the 10.25% Senior Notes due 2010 and 2013 of CCH II, LLC. As
previously announced, Paul G. Allen will continue as an investor,
and will retain the largest voting interest in the Company. The
Pre-Arranged Plan calls for the reinstatement of the current debt
of Company subsidiaries CCO Holdings, LLC and Charter
Communications Operating, LLC. The Company has paid, and intends to
continue to pay, on a current basis in accordance with existing
terms on the secured debt. The unsecured notes at CCO Holdings, LLC
will continue to accrue interest that will be paid upon
emergence.
�The financial restructuring is good news for Charter and our
customers and, if approved, will result in Charter being better
positioned to deliver the products and services our customers
demand now and in the future,� said Neil Smit, President and Chief
Executive Officer. �The support of our bondholders and their new
investment in Charter also underscores their confidence in our
company and business. Charter�s operations are strong, and
throughout this process, we will continue serving our customers as
usual. We look forward to an expeditious restructuring, and once
completed, we believe that Charter will be a stronger company.�
Charter expects that cash on hand and cash from operating
activities will be adequate to fund its projected cash needs as it
proceeds with its financial restructuring and therefore does not
intend to seek debtor-in-possession (DIP) financing.
In conjunction with today�s filing, the Company also filed a
variety of customary motions to continue to support its employees,
customers and vendors during the financial restructuring process.
The Company has filed motions seeking permission to continue
employee wage and benefits programs and honor current customer
programs without interruption, and to pay trade creditor balances
and fees to Local Franchise Authorities incurred before and after
the filing in full and in the normal course.
Charter has retained Kirkland & Ellis LLP as legal counsel,
Lazard as financial advisor and AlixPartners LLP as restructuring
advisor.
The Bondholder Committee is represented by Paul, Weiss, Rifkind,
Wharton & Garrison LLP as legal counsel, and its financial
advisors are Houlihan Lokey Howard & Zukin Capital, Inc. and
UBS Securities LLC.
Charter also appointed Gregory L. Doody as its Chief
Restructuring Officer. In this role, Mr. Doody will help oversee
the financial restructuring process, thereby minimizing the impact
of the restructuring process on Charter�s day-to-day operations. He
has led successful in-court and out-of-court restructurings,
including Calpine Corporation and HealthSouth Corporation.
On March 16, 2009, Charter Communications, Inc. filed its Annual
Report on Form 10-K with the Securities and Exchange Commission,
which contained a going concern modification to the audit opinion
from its independent registered public accounting firm. Further
details are available in the Company�s 10-K.
The Company�s principal Chapter 11 petition has been assigned
case number 09-11435. Additional information about Charter�s
restructuring, including the disclosure statement describing the
Pre-Arranged Plan and the terms of the committed and optional
investments by members of the Bondholder Committee, is available at
the Company�s website www.charter.com.You may also receive
information from the Company�s restructuring information line,
800-419-3922. For access to Court documents and other general
information about the Chapter 11 cases, please visit
www.kccllc.net/charter.
This release is not intended as a solicitation for a vote on the
Pre-Arranged Plan.
About Charter Communications
Charter Communications, Inc. is a leading broadband
communications company and the fourth-largest cable operator in the
United States. Charter provides a full range of advanced broadband
services, including advanced Charter Digital Cable(R) video
entertainment programming, Charter High-Speed(R) Internet access,
and Charter Telephone(R). Charter Business(TM) similarly provides
scalable, tailored, and cost-effective broadband communications
solutions to business organizations, such as business-to-business
Internet access, data networking, video and music entertainment
services, and business telephone. Charter's advertising sales and
production services are sold under the Charter Media(R) brand. More
information about Charter can be found at www.charter.com.
Cautionary Statement Regarding Forward-Looking
Statements:
This release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
regarding, among other things, our plans, strategies and prospects,
both business and financial. Although we believe that our plans,
intentions and expectations reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you
that we will achieve or realize these plans, intentions or
expectations. Forward-looking statements are inherently subject to
risks, uncertainties and assumptions including, without limitation,
the factors described under "Risk Factors" from time to time in our
filings with the Securities and Exchange Commission ("SEC"). Many
of the forward-looking statements contained in this release may be
identified by the use of forward-looking words such as "believe,"
"expect," "anticipate," "should," "plans," "will," "may," "intend,"
"estimated," "aim," "on track," "target," "opportunity" and
"potential," among others. Important factors that could cause
actual results to differ materially from the forward-looking
statements we make in this release are set forth in other reports
or documents that we file from time to time with the SEC, including
our quarterly reports on Form 10-Q filed in 2008 and our most
recent annual report on Form 10-K, and include, but are not limited
to:
- the completion of the Company's
restructuring including the outcome and impact on our business of
the proceedings under Chapter 11 of the Bankruptcy Code;
- the ability of the Company to
satisfy closing conditions under the agreements-in-principle and
Pre-Arranged Plan and related documents and to have the
Pre-Arranged Plan confirmed by the bankruptcy court;
- the availability of and access
to, in general, 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 comply with all
covenants in our indentures and credit facilities, any violation of
which, if not cured in a timely manner, could trigger a default of
our other obligations under cross-default provisions;
- 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 incumbent telephone companies, direct
broadcast satellite operators, wireless broadband providers, and
digital subscriber line ("DSL") providers;
- difficulties in growing, further
introducing, 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.
All forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
this cautionary statement. We are under no duty or obligation to
update any of the forward-looking statements after the date of this
release.
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