Charter Communications to file Chapter 11
Charter Communications Inc., a cable operator with a big presence in Central and Western Massachusetts, said today that it will restructure its heavy debt load under Chapter 11 bankruptcy protection filing by April 1, wiping out shareholders as the company reached a deal with senior debt holders.
The cable operator, controlled by Microsoft co-founder Paul Allen, said in a statement it would file for Chapter 11 on or before April 1 after it reached a deal with some of its creditors helping to reduce its debt by around $8 billion. It had a debt load of around $21 billion as of Sept 30.
Various debt holders and bondholders will receive a mix of new notes, equity and cash depending on their seniority. Shareholders will not receive anything for common stock, which will be canceled.
Under the agreement around $10 billion of bank debt will remain on Charter's balance sheet untouched while the $11 billion held by bondholders will be reduced to $3 billion, people familiar with the agreement said.
The bondholders will have most of their notes converted to new notes and common stock or warrants to buy common stock.
Paul Allen will continue as an investor and retain the largest voting interest in Charter.
Allen's various non-equity holdings in Charter including debt and preferred were converted to equity under the new capital structure, these people said.
Chief executive Neil Smit said in a statement the agreement covered "a significant portion" of bondholders.
The company, which has more than 5.5 million subscribers, said it would make an overdue interest payment of $74 million before a final deadline of Feb. 15. (Reuters)