8-KMaterial AgreementsFinancial EventsSecurities & Listing+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Nov 30, 2004)

Filed November 30, 2004For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) filed an 8-K on November 30, 2004, detailing significant financing activities. On November 22, 2004, the company issued $862.5 million in Convertible Senior Notes due 2009 through a private placement under Rule 144A. These notes carry a 5.875% annual interest rate and are convertible into Charter's Class A common stock at an initial price of approximately $2.42 per share. The net proceeds from this issuance will be used, in part, to redeem $588 million of outstanding 5.75% Convertible Senior Notes due October 2005, with the remainder allocated for general corporate purposes. This transaction also involves complex arrangements, including the creation of "mirror" securities by a subsidiary, Charter Communications Holding Company, LLC (Holdco Sub), to comply with corporate governance requirements. Furthermore, Charter has agreed to loan up to 150 million shares of its Class A common stock to an affiliate of Citigroup Global Markets Inc. and has committed to filing resale registration statements for both the new notes and the loaned shares, with penalties for non-compliance. The company has also called for the redemption of its 5.75% Convertible Senior Notes due 2005, effective December 23, 2004.

Key Highlights

  • 1Issued $862.5 million in 5.875% Convertible Senior Notes due 2009 via private placement (Rule 144A).
  • 2Net proceeds will be used to redeem $588 million of 5.75% Convertible Senior Notes due 2005 and for general corporate purposes.
  • 3Notes are convertible into Class A common stock at an initial conversion price of approximately $2.42 per share.
  • 4Entered into agreements to loan up to 150 million shares of Class A common stock to a Citigroup affiliate.
  • 5Agreed to file resale registration statements for the notes and loaned shares, subject to liquidated damages for delays.
  • 6Called for redemption of all outstanding $588 million of 5.75% Convertible Senior Notes due 2005, effective December 23, 2004.
  • 7Created "mirror" securities by subsidiary Holdco Sub to align with parent company obligations and governance.

Frequently Asked Questions

The primary purpose of issuing the $862.5 million in new Convertible Senior Notes due 2009 was to redeem the company's outstanding $588 million of 5.75% Convertible Senior Notes due October 2005 and to provide funds for general corporate purposes. This move allows Charter to refinance its debt and potentially improve its capital structure.

The notes have an original principal amount of $862.5 million, mature in 2009, and bear an annual interest rate of 5.875%, payable semi-annually. They are convertible into Charter's Class A common stock at an initial rate of 413.2231 shares per $1,000 principal amount, equating to a conversion price of approximately $2.42 per share. Charter may deliver cash or a combination of cash and stock upon conversion.

Charter has agreed to loan up to 150 million shares of its Class A common stock to an affiliate of Citigroup Global Markets Inc. This arrangement is part of the overall financing structure and likely facilitates the marketability or trading of the new notes. Charter has also agreed to file registration statements covering these loaned shares, with potential penalties for failing to meet deadlines.

Charter has called for the redemption of all $588 million of its 5.75% Convertible Senior Notes due 2005, effective December 23, 2004, at a redemption price of 101.15% of the principal amount plus accrued interest. This action, funded partly by the new note issuance, effectively retires this older debt obligation.