Cable TV company to file for Chapter 11

Charter says service to continue as usual

Charter Communications Inc., the second-largest cable television provider in Massachusetts, said yesterday it will file for debt restructuring under Chapter 11 of the federal bankruptcy law.

Charter, a St. Louis-based company, provides cable TV service to a number of communities in central and western Massachusetts, including Worcester. The company said in a statement that service will continue as usual and the restructuring is not expected to result in major job cuts. "We are committed to continuing to provide our 5.5 million customers with quality cable, Internet, and phone service, and through this agreement, we will be even better positioned to deliver the products and services our customers demand now and in the future," said chief executive Neil Smit.

Under the plan, Charter would file its bankruptcy petition sometime before April 1. The restructuring would slice about $8 billion from the company's current debt burden of $20 billion. Debtors will give up their claims in exchange for common stock or warrants that entitle them to stock. In ad dition, Charter would make $74 million in past-due interest payments.

News of the planned filing came as Charter disclosed solid preliminary revenues for the fourth quarter of 2008. The company said it had quarterly revenue of $1.653 billion, up 7 percent over the same period a year ago. Preliminary earnings before interest, taxes, depreciation, and amortization were $619 million, up 10 percent from 2007. Charter added over 45,000 subscribers in the fourth quarter and 651,000 for all of 2008.

But a report by Morgan Stanley telecommunications analyst David Gober said Charter's heavy debt load has hindered the company's ability to upgrade its equipment and services, and caused it to lose market share to rival telecom companies.

Microsoft Corp. cofounder Paul Allen, who holds a controlling stake in Charter, will remain as an investor and retain the largest voting interest in the company. While his 51 percent stake in the company will be wiped out, along with those of other shareholders as the stock is canceled, Allen was given voting control by debt holders. Allen also holds some debt, which will be converted, and preferred stock.

Material from the Associated Press was used in this report. Hiawatha Bray can be reached at bray@globe.com.