Charter Misses Interest Payment
Operator Says Discussions With Bondholders Continue
By Mike Farrell -- Multichannel News, 1/15/2009 9:07:00 AM
After purposely missing a Jan. 15 interest payment, Charter Communications appeared to be moving closer to a restructuring.
In a press release early Thursday, Charter said that two of its subsidiaries – CCH I Holdings and Charter Communications Holdings – did not make a scheduled $73.7 million interest payment due Jan. 15. The company said that if the payments are not made in the next 30 days, that could trigger a default which would allow at least 25% of note holders to declare the full amount of the notes immediately due and payable. At the time of the announcement, the CCH I and Charter Communications Holdings notes had outstanding principal of $949 million and $204 million, respectively.
The news of the missed interest payment comes a day after Charter said it had amended its bonus compensation program for senior executives, eliminating its executive cash award program and instituting a restructuring value bonus plan for executives.
In December, Charter said it was negotiating with its bondholders regarding a possible restructuring of its debt. That prompted debt rating agency Moody’s Investor’s Service to lower its probability of default rating on the St. Louis-based MSO, predicting that the cable operator could be planning a pre-packaged Chapter 11 bankruptcy to ease its debt burden.
The move not to make the interest payment could be a sign that the company is inching closer to an agreement with its bondholders. In a statement Charter said it had more than $900 million in cash and cash equivalents as of Jan. 15, more than enough to cover the payment.
“We are engaged in discussions with our bondholders aimed at improving the company’s capital structure,” Charter CEO Neil Smit said in a statement. “We’ve made significant progress over the last several years with regard to operational improvements and we hope to make similar progress with regard to our capital structure. Charter provides a valuable service in an industry that continues to show strong demand, and our goal throughout this ongoing process is to take steps that will better position Charter for the future. These discussions with our bondholders do not affect our commitment to continuing to offer customers reliable service, enhanced product offerings and quality care.”
