Allen Sells Out for Hundreds
Charter Mogul Unloads 28.5 Million Shares in MSO for $996
by Mike Farrell -- Multichannel News, 6/22/2009
About 10 years after Charter Communications went public in 1999, Paul Allen's estimated $7 billion investment in the 5 million video-subscriber cable company didn't reap him enough to buy a decent big-screen TV.
According to a securities filing last Thursday, Allen sold 28.5 million shares of Charter stock — essentially all of his Class-A holdings in the company — for $996.36.
A quick look at consumer-electronics retailer Best Buy's site shows that's enough to purchase a 40-inch Samsung flat panel HDTV at $849.99, but short of the $1,199.99 needed for a 50-inch Panasonic Viera HDTV model.
The transaction doesn't appear to have any effect on Charter or its pending bankruptcy reorganization. Allen still owns 378 million Class B shares, which are convertible to Class A shares on a one-to-one basis.
But it does underscore how Allen's cable fortunes have fallen.
Allen — who in 1999 was the second-richest American, according to Forbes, with a net worth of $40 billion (his former Microsoft partner Bill Gates was No. 1) — fell to No. 12 last year with a net worth of $16 billion.
The filing said Allen sold the Charter shares in several private transactions for $0.000035 each. At that price, Allen's 28,467,421 shares reaped a total of $996.36.
Charter's stock once traded as high as $27.75 in November 1999, shortly after it went public, according to the NASDAQ Web site.
It's traded considerably below that in recent years — it hovered around $1 for most of 2008. The shares were delisted from the NASDAQ exchange shortly after Charter filed for Chapter 11 bankruptcy protection on March 27, and have traded over the counter (as “pink sheets”) since. It traded at about 3 cents Friday morning (June 19).
Just why Allen chose to sell what are essentially worthless shares — and who would buy them — was not disclosed. Charter referred questions to Vulcan Inc., the holding company for Allen's private investments.
Vulcan spokesman David Postman said in an e-mail message the company does not comment on these issues and “will let the filing speak for itself.”
“Perhaps [he] sold to someone who is looking for a little tax shelter?” guessed Miller Tabak media analyst David Joyce, who followed the stock when it traded on NASDAQ. “I really don't know.”
The sale doesn't seem to affect Allen's position in Charter once it emerges from bankruptcy, expected sometime this summer. Allen, who had previously owned 52% of Charter equity and 91% of its voting shares, will end up with a 4% equity stake and 35% of the vote in the new company.
