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Charter Leaves Chapter 11

Jeff Baumgartner
11/30/2009

The threat of an appeal from a group of irked lenders could not stop Charter Communications Inc. from emerging from Chapter 11 and polishing off a pre-arranged reorganization plan that will allow the MSO to shave $8 billion from its debt load. (See Charter Exits Chapter 11.)

Charter announced its exit from bankruptcy today, less than two weeks after the United States Bankruptcy Court for the Southern District of New York approved the plan, and a little more than nine months after the MSO filed for Chapter 11. (See Court Confirms Charter Reorg Plan, Charter Turns to Chapter 11, and Charter's Chapter 11 Adds a Page.)

Under the plan, Charter is to melt down $8 billion of $21.7 billion total debt, and reinstate about $11.4 billion of its senior bank debt, a move, the company claims, that will allow it to to generate positive free cashflow by reducing more than $830 million in annual interest expenses. The plan also gives Charter more than $3 billion for refinancing and new capital.

Charter is also set to come under the control of a handful of creditors, including Apollo Management AP, Crestview Partners, Oaktree Capital Group, and Franklin Resources.

The bankruptcy exit cancels all shares of Charter's common stock. Charter chairman and Microsoft Corp. (Nasdaq: MSFT) founder Paul Allen is to remain on as an investor and will retain the largest voting interest (35 percent) in the St. Louis-based MSO.

Charter said it intends to apply for listing of its new common stock on the Nasdaq "not earlier than 45 days after emergence," making the debut of the new stock in mid-January 2010 a possibility.

Charter is exiting Chapter 11 despite an appeal in the works by JP.MorganChase and other lenders that are chafed about the terms of the bankruptcy plan. That group tried to block the plan, complaining in part about the provision that allows Allen to keep his voting stake and enables the MSO to reinstate a gob of its senior bank debt. (See Charter Bankruptcy Exit Hits a Speed Bump .)

Charter declined to comment on the move for an appeal.

The company has demonstrated certain operational gains since filing for bankruptcy on March 27. In Charter's most recent third quarter, revenues rose 3.8 percent, to $1.69 billion, with average monthly revenue per basic video subscriber rising 8.2 percent, to $115.26. However, that was not enough to avoid a net loss of $1.03 billion in the period. (See Charter Reports Q3.)

— Jeff Baumgartner, Site Editor, Cable Digital News

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