Thursday, March 26, 2009

Charter Enters Pre-Arranged Chapter 11, Seeks to Eliminate $8 Billion in Debt

Charter Communications, the fourth-largest cable operator in the United States, entered into a pre-arranged Chapter 11 bankruptcy restructuring that 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").

Charter said it 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.