Charter Seeking 'Financial Alternatives'

Charter Communications Inc. has tapped Lazard LLC, the MSO’s long-standing financial advisor, to step up discussions with the company’s bondholders about “financial alternatives” aimed at improving the cable operator’s balance sheet. (See Charter Seeks 'Alternatives' .)

“We believe engaging in discussions with our bondholders, aimed at improving our capital structure and enhancing our financial flexibility, is in the company’s and our customers’ best interests,” company president and CEO Neil Smit said, in a prepared statement.

He added that the objective “is to improve our balance sheet, which will better position Charter for the future, while we continue to focus on delivering quality service to our customers and growing our business.”

The MSO did not divulge any specific alternatives it might try to pursue. In March, acquisition rumors swirled after Paul Allen, Charter’s controlling stakeholder and the billionaire co-founder of Microsoft Corp. (Nasdaq: MSFT), revealed that he had received “informal inquiries” about potential deals or investments involving the cable MSO.

Nothing’s come of it so far, but some analysts speculated at the time that Time Warner Cable Inc. (NYSE: TWC) or Comcast Corp. (Nasdaq: CMCSA, CMCSK) would be among the most interested in purchasing some of Charter’s cable properties -- at least those that align strategically with some of TWC’s and Comcast’s existing system clusters -- if Charter opted for a sale option. (See Charter Gets Nibbles.)

Charter officials were not immediately available for further comment Friday morning.

Charter, which is saddled with about $21 billion in debt (as of Sept. 30, 2008) and has witnessed a board member exodus in recent weeks, noted that it had cash and cash equivalents in excess of $900 million as of Dec. 10, 2008 -- funds that it can tap to continue paying operating costs and expenses. (See Dolgen Quits Charter Board, Davis Leaves Charter Board, and Nathanson Resigns From Charter Board.)

Charter, which reportedly laid off 75 employees recently and reduced its operating divisions from three to two, is coming off a third quarter in which revenues rose 7.3 percent and net customer adds rose by more than 50 percent year-over-year. (See Charter Posts Q3.)

Charter stock was trading at 15 cents per share this morning (up 1.7%), off from a 52-week high of $1.68.

— Jeff Baumgartner, Site Editor, Cable Digital News