8-KOther Events

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report (Jul 11, 2003)

Filed July 11, 2003For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) filed an 8-K report on July 10, 2003, detailing a dispute concerning the ownership and contractual terms of the CC VIII Interest, originally valued at approximately $630 million. This interest was issued as part of an acquisition and had specific preferential return and distribution rights for the original holders, affiliated with AT&T Broadband (now Comcast). These rights were transferred to Paul G. Allen in June 2003 via a 'Comcast Put Right' exercised by the original sellers. The core of the issue lies in a discrepancy within the original transaction documentation for the Bresnan acquisition. Charter's Board formed a Special Committee which has preliminarily determined that the documentation was incomplete or incorrect regarding the ultimate ownership of the CC VIII Interest post-transfer to Mr. Allen. The Special Committee is seeking to reform these contracts, proposing that Mr. Allen contribute the CC VIII Interest to Charter Communications Holding Company, LLC in exchange for membership units. The company is now entering non-binding mediation with Mr. Allen to resolve this dispute, as he reportedly disagrees with the Special Committee's findings.

Key Highlights

  • 1Dispute over the ownership and contractual terms of a $630 million CC VIII Interest, originally issued to Comcast-affiliated sellers.
  • 2The CC VIII Interest was transferred to Paul G. Allen on June 6, 2003, via a 'Comcast Put Right'.
  • 3Charter's Special Committee believes the original Bresnan transaction documents had errors regarding the CC VIII Interest's ultimate ownership.
  • 4The Special Committee seeks to reform the contract and have Mr. Allen contribute the CC VIII Interest to Charter Communications Holding Company, LLC in exchange for membership units.
  • 5Mr. Allen reportedly disagrees with the Special Committee's preliminary determinations.
  • 6Charter and Mr. Allen will enter into non-binding mediation to resolve the dispute.
  • 7The dispute could impact the future holding structure of the CC VIII Interest within Charter's subsidiaries.

Frequently Asked Questions

The CC VIII Interest is a Class A Preferred Membership Interest in a Charter subsidiary, CC VIII, LLC. It was initially valued at approximately $630 million and was issued as part of an acquisition. It carries specific preferential distribution and return rights, making its ownership and terms crucial to Charter's financial structure and operations.

The 'Comcast Put Right' was a contractual right granted to the original sellers of the CC VIII Interest (affiliated with AT&T Broadband/Comcast) to sell it back to Paul G. Allen for approximately $630 million plus annual interest. This right was exercised in April 2002, and the transaction was completed on June 6, 2003, making Mr. Allen the holder of the CC VIII Interest.

The dispute arises from the Special Committee's preliminary determination that errors were made in the original transaction documents for the Bresnan acquisition, affecting the ultimate ownership and terms of the CC VIII Interest after its transfer to Mr. Allen. The Special Committee wants to reform these contracts to reflect a different ownership structure where Mr. Allen would contribute the interest to a Charter holding company in exchange for membership units, a proposal Mr. Allen reportedly disagrees with.

Charter Communications has formed a Special Committee to investigate the matter. Following its preliminary findings, both the Special Committee and Mr. Allen will enter into non-binding mediation in an attempt to resolve the dispute as soon as practicable.