As part of an agreement reached with its debt holders, beleaguered cable operator Charter Communications Inc. (CHTR) on Friday, filed for Chapter 11 bankruptcy. The company also commenced the next phase of its previously announced financial restructuring.
Under the agreement, members of a committee of certain of the company's debt holders will invest 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.
On March 16, 2009, the company filed its Annual Report on Form 10-K with the SEC, which contained a going concern modification to the audit opinion from its independent registered public accounting firm.
As of December 31, 2008, Charter had $21.7 billion in total debt. Charter expects the financial restructuring to reduce its debt by about $8 billion.
Charter Communications, controlled by Microsoft's co-founder, Paul Allen has more than 5.5 million subscribers. Due to impairment charge, Charter's net loss for 2008 widened to $2.45 billion or $6.56 per share from $1.62 billion or $4.39 per share in 2007. On a pro forma basis, the company's annual revenues were $6.47 billion, an increase of 8.5% over 2007.
The company noted that its cash on hand and cash from operating activities will be adequate to help meet its needs to continue operating as it proceeds with its financial restructuring and therefore does not intend to seek debtor-in-possession financing. The company had cash and cash equivalents of $960 million as of December 31.
Charter Communications said it has retained Kirkland & Ellis LLP as legal counsel, Lazard as financial advisor and AlixPartners LLP as restructuring advisor. The company has appointed Gregory Doody as its Chief Restructuring Officer. In this role, Doody will help oversee the financial restructuring process, thereby minimizing the impact of the restructuring process on Charter's day-to-day operations.
CHTR is currently down 16.25% at $0.02 on a volume of 9.4 million shares. In the past 52 weeks, the stock has traded in the range of $0.02 - $1.68.
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