Charter to Declare Chapter 11 Bankruptcy
Charter Communications will file for Chapter 11 bankruptcy as part of a financial restructuring on or before April 1. Charter says it has reached an agreement with a committee of some debt holders to reduce its obligations by about $8 billion.
The company had net debt of slightly more than $21 billion as of Sept. 30, 2008, so despite wiping out what remains of the equity value, and paring debt by $8 billion, Charter will still have to contend with as much as $13 billion of remaining debt.
Controlled by Microsoft Corp. co-founder Paul Allen and based in St. Louis, Charter has about 5.6 million customers in 28 states.
The cable company has sold the most U.S. high-yield bonds of any company in the past decade, according to data compiled by Bloomberg. Allen bought Charter in 1998, amassed the company’s debt burden while building it into the fourth-largest U.S. cable provider.
Charter has reported losses every year since going public in 1999. In some ways, Charter is less a victim of the current credit tightness and more a victim of the 2001 Internet and telecom crash, though, as the company has been struggling with high debt loads since that time.