Justice Sirikah

Charter Communications, Inc. (PinkSheets: CHTRQ) Spared From $8 billion Worth of Arrears on Emergency from Bankruptcy

by Justice Sirikah December 1, 2009
chtrq_logo.jpgCharter Communications, Inc. (PinkSheets: CHTRQ), a Massachusetts-based cable television operator controlled by the co-founder of Microsoft Corp. Paul Allen, formally announced on Monday that it has successfully completed its financial restructuring, leading to an exit from Chapter 11. It was Judge James Peck from the United States Bankruptcy Court for the Southern District of New York who presided over the approval of the pre-arranged Joint Plan of Reorganisation on November 17,2009.

  Under the plan, Charter will have its indebtedness scaled down by 40 percent, which translate to a total of $8 billion. Before entering bankruptcy protection in March this year, the company was saddled with debt obligations of $21 billion which can be traced to an over ambitious expansion. As a result of servicing such debts in addition to interest payments, Charter has never made a profit since registering as a public company in 1999.

   A statement released by the company also said the plan leaves Charter Communications evenly balanced to bring forth a positive cash flow citing a significant write down of yearly interest rates. And while heading for their date with destiny, Charter will sustain the rest of refinancing by $1.6 billion from an equity rights offering besides exchanging its current CCH II notes for approximately $1.7 billion in new notes of 13.5 percent due 2016.

   “We have restructured our balance sheet without losing sight of serving our customers and maintaining our business relationships”, the firm’s president and chief executive officer Neil Smit. “Charter will remain focussed on further enhancing the customer experience and is positioned to generate free cash flow”.

  However, the deal also includes immediate cancellation of the company’s existing common stock. Charter’s stockholders had sought, alongside lenders and bondholders, to halt the company’s emergence from Chapter 11 in an attempt to save their interests but to no avail. Still on the downside, the fact that Paul Allen is staying put as an investor in Charter with a majority of voting rights also begs the question as he had led the company through a roller-coaster of loses over the years.

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