Capital Markets

Charter Communications Looks to Put off Debt Maturity

Majority owner Paul Allen is reportedly mulling ways to de-leverage the cable company.
Stephen TaubAugust 29, 2007

Charter Communications, which may be on the block or headed toward private-equity financing, has filed a registration statement to exchange up to $309 million of its convertible notes in a bid to extend its debt maturities.

The highly leveraged cable company is currently offering up to $595 million principal amount of new 7 percent Convertible Senior Notes due in 2027 in exchange for up to $309 million of its existing convertible notes. The 5.875 percent Convertible Senior Notes have a $413 million principal amount outstanding and are due in 2009.

Charter also finds itself in the middle of a highly controversial Supreme Court case revolving around the question of whether “secondary actors” like banks and other vendors can be held liable for the misdeeds of their corporate clients. The suit alleges that Charter vendors took part in a sham transaction by the cable company involving behind-the-scenes dealings. The vendors included Motorola and Scientific-Atlanta (now owned by Cisco).

Earlier this month, a number of press reports suggested that majority owner Paul Allen, also the cofounder of Microsoft, may be looking to buy the company or recapitalize it. He was also mulling ways to reduce Charter’s debt, according to the reports.

The exchange offer will remain open up to September 26, according to the company. The new convertible notes will have a coupon of 7 percent and a 40 percent conversion premium. The dealer managers for the exchange offer are Citigroup Global Markets Inc. and Morgan Stanley.