MARCH 30, 2009 -- As part of a previously announced restructuring strategy, Charter Communications Inc. and its subsidiaries filed its pre-arranged plan and Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York. Charter also reached agreements in principle with members of a committee of certain debt holders which it calls the "Bondholder Committee" for additional investments in the company.
The agreements in principle "contemplate the investment" in Charter's words by members of the Bondholder Committee of more than $3 billion, including up to $2 billion in equity proceeds, $1.2 billion in roll-over debt, and $267 million in new debt to support the overall refinancing.
Charter, the fourth-largest cable operator in the United States, expects the proposed restructuring to position the company to generate positive free cash flow through interest expense reductions.
The company says the pre-arranged plan is supported by Paul G. Allen and affiliates of Paul G. Allen and by the Bondholder Committee consisting of parties holding approximately 73% in principal amount of the 11.00% Senior Secured Notes due 2015 of CCH I, LLC and parties holding approximately 52% in principal amount of the 10.25% Senior Notes due 2010 and 2013 of CCH II, LLC. As previously announced, Paul G. Allen will continue as an investor, and will retain the largest voting interest in Charter.
The pre-arranged plan calls for the reinstatement of the current debt of company subsidiaries CCO Holdings, LLC and Charter Communications Operating, LLC. The company has paid, and intends to continue to pay, on a current basis in accordance with existing terms on the secured debt. The unsecured notes at CCO Holdings, LLC will continue to accrue interest that will be paid upon emergence.
"The financial restructuring is good news for Charter and our customers and, if approved, will result in Charter being better positioned to deliver the products and services our customers demand now and in the future," said Neil Smit, Charter's president and CEO. "The support of our bondholders and their new investment in Charter also underscores their confidence in our company and business. Charter's operations are strong, and throughout this process, we will continue serving our customers as usual. We look forward to an expeditious restructuring, and once completed, we believe that Charter will be a stronger company."
Charter expects that cash on hand and cash from operating activities will be adequate to fund its projected cash needs as it proceeds with its financial restructuring and therefore does not intend to seek debtor-in-possession (DIP) financing.
Charter has retained Kirkland & Ellis LLP as legal counsel, Lazard as financial advisor and AlixPartners LLP as restructuring advisor. Charter also appointed Gregory L. Doody as its chief restructuring officer. Doody will help oversee the financial restructuring process.
The company's principal Chapter 11 petition has been assigned case number 09-11435. Additional information about Charter's restructuring, including the disclosure statement describing the pre-arranged plan and the terms of the committed and optional investments by members of the Bondholder Committee, is available at the company's website.
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