8-KRegulation FD

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Regulation FD Disclosure (Mar 31, 2005)

Filed March 31, 2005For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) announced on March 31, 2005, a significant decision regarding its preferred stock dividends. The company has elected not to make its first-quarter 2005 dividend payments on its preferred stock. This decision, driven by the inability to confirm sufficient surplus under Delaware law for dividend issuance, results in an increase of the preferred stock dividend accrual rate from 5.75% to 7.75% annually. Importantly, management emphasized that this action does not affect the company's compliance with its debt covenants or its overall liquidity. Charter stated that its ability to meet other obligations and conduct normal business operations remains unaffected. However, the company acknowledged an inability to predict the future impact on its ability to secure additional financing.

Key Highlights

  • 1Charter Communications elected not to pay preferred stock dividends for Q1 2005.
  • 2The annual dividend accrual rate on preferred stock will increase from 5.75% to 7.75%.
  • 3The decision was due to uncertainty regarding available surplus under Delaware law for dividend payments.
  • 4This action does not violate any covenants in the company's credit facilities or indentures.
  • 5The company asserts that its liquidity position and ability to meet other obligations are not adversely impacted.
  • 6Normal business operations are expected to continue without adverse effect.
  • 7The potential impact on future financing capabilities is currently unpredictable.

Frequently Asked Questions

Charter Communications did not pay its preferred stock dividends for the first quarter of 2005 because the company could not definitively determine that it had an adequate surplus, as required by Delaware law, available for dividend issuance.

While the cash payment was skipped, the annual dividend accrual rate on the preferred shares automatically increases from 5.75% to 7.75%. This means the total amount of dividends owed to preferred stockholders will grow at a higher rate.

According to the filing, this decision does not impact Charter's compliance with covenants under its credit facilities or indentures. The company also states it does not adversely affect its overall liquidity or its ability to make payments on other obligations, suggesting no immediate impact on creditworthiness related to debt agreements.

Charter acknowledges that it cannot predict the impact of this decision on its ability to raise additional financing in the future. This could be a point of concern for investors assessing the company's long-term financial flexibility.