8-KMaterial AgreementsFinancial EventsExhibits & Filings

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (May 2, 2006)

Filed May 2, 2006For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) filed an 8-K on May 2, 2006, reporting the entry into a significant Amended and Restated Credit Agreement by its indirect subsidiary, Charter Communications Operating, LLC (CCO), on April 28, 2006. This new agreement replaces a prior credit facility and establishes a new financing structure totaling $6.85 billion, comprised of a $1.5 billion senior secured revolving line of credit, a $5 billion term loan facility, and a $350 million one-year revolving line of credit (R/T facility). The R/T facility is set to convert into term loans after one year, with term loans maturing in April 2013. This refinancing is a critical development for investors as it restructures the company's debt and provides a significant liquidity runway. Concurrently, the company announced the termination of its senior bridge loan agreement dated October 17, 2005, which was put in place previously. The new credit facility is secured by substantially the same collateral as the previous agreement and is guaranteed by CCO Holdings, LLC and certain CCO subsidiaries. While this provides a substantial credit facility, investors should note the agreement includes standard covenants and restrictions on CCO's business operations, with potential for debt acceleration upon default or change of control.

Key Highlights

  • 1Charter Communications Operating, LLC (CCO) entered into an Amended and Restated Credit Agreement on April 28, 2006.
  • 2The new credit facility totals $6.85 billion, comprising a $1.5 billion revolving credit line, a $5 billion term loan facility, and a $350 million one-year R/T facility.
  • 3The R/T facility will convert to term loans after one year; term loans mature on April 28, 2013.
  • 4Interest rates are variable, based on LIBOR or a base rate, plus an applicable margin that can fluctuate.
  • 5The Credit Agreement is secured by CCO's assets and guaranteed by CCO Holdings, LLC and certain subsidiaries.
  • 6The senior bridge loan agreement dated October 17, 2005, was terminated in connection with the new credit facility.
  • 7The agreement contains various covenants and restrictions on CCO's business activities, with potential for debt acceleration upon default or change of control.

Frequently Asked Questions

The Amended and Restated Credit Agreement establishes a new financing structure totaling $6.85 billion. This includes a $1.5 billion senior secured revolving line of credit, a $5 billion term loan facility, and a $350 million one-year revolving line of credit (R/T facility).

The term loans, including any amounts converted from the R/T facility, are subject to amortization and will have their remaining principal amount due on April 28, 2013.

The $350 million R/T facility is a one-year revolving line of credit. Amounts outstanding under this facility will convert into term loans after one year, effectively extending the maturity of that portion of the financing.

Yes, the Credit Agreement includes numerous restrictions on CCO's and its subsidiaries' ability to take certain actions such as granting liens, merging, selling assets, incurring additional indebtedness, making investments, and engaging in affiliate transactions. It also contains affirmative covenants and events of default, including a cross-default provision and a change of control clause, which could lead to debt acceleration if triggered.