8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Mar 12, 2007)

Filed March 12, 2007For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) filed an 8-K on March 12, 2007, detailing significant debt restructuring activities and a partial redemption of outstanding notes. The company's indirect subsidiary, Charter Communications Operating, LLC, entered into an Amended and Restated Credit Agreement, establishing a $1.5 billion revolving credit facility, a $5 billion existing term loan, and a $1.5 billion new term loan. This agreement, secured by the assets of Charter Operating and its subsidiaries, includes financial covenants such as a consolidated leverage ratio not to exceed 5:1 and a first lien leverage ratio not to exceed 4:1. Additionally, CCO Holdings, LLC, another indirect subsidiary, secured a $350 million term loan facility, secured by the equity interests of Charter Operating. Complementing these credit facility updates, Charter Communications also announced the redemption of two series of senior notes: $187.3 million in 8.625% Senior Notes due 2009 and $550 million in Senior Floating Rate Notes due 2010. These redemptions are intended to manage the company's debt profile and optimize its capital structure. Charter expects these actions, along with existing cash and cash flow, to cover its financial needs through 2008, though it anticipates potential shortfalls in 2009 and beyond. The company also launched a cash tender offer for certain senior notes, capped at $100 million, to further manage its debt obligations.

Key Highlights

  • 1Charter Communications Operating, LLC entered into an Amended and Restated Credit Agreement totaling $8 billion in facilities ($1.5B revolving, $5B existing term, $1.5B new term).
  • 2CCO Holdings, LLC secured a new $350 million term loan facility.
  • 3The credit agreements introduce new interest rate margins and amortization schedules, with terms extending to 2013 and 2014.
  • 4Charter Communications initiated the redemption of approximately $187.3 million in 8.625% Senior Notes due 2009 and $550 million in Senior Floating Rate Notes due 2010.
  • 5The company launched a cash tender offer for certain outstanding senior notes, with a maximum aggregate purchase price of $100 million.
  • 6New financial covenants were established, including a consolidated leverage ratio not to exceed 5:1 and a first lien leverage ratio not to exceed 4:1 for Charter Operating.
  • 7Charter anticipates that its current cash on hand, operating cash flows, and credit facilities will be sufficient for its needs through 2008, but may not be sufficient for 2009 and beyond.

Frequently Asked Questions

Charter Communications Operating, LLC established a $1.5 billion revolving credit facility and a $1.5 billion new term loan facility, in addition to continuing a $5 billion existing term loan. CCO Holdings, LLC secured a $350 million term loan facility. The total new debt facilities are $3 billion, with $5 billion being a continuation and modification of existing debt.

Charter Communications is redeeming all $187.3 million in outstanding principal of its 8.625% Senior Notes due 2009 and $550 million in outstanding principal of its Senior Floating Rate Notes due 2010. Additionally, the company is conducting a cash tender offer for certain other outstanding senior notes, capped at $100 million.

For Charter Communications Operating, LLC, the key financial covenants include maintaining a quarterly consolidated leverage ratio not to exceed 5 to 1 and a first lien leverage ratio not to exceed 4 to 1. These agreements also impose various restrictions on incurring debt, granting liens, mergers, asset sales, and other corporate actions.

Charter expects that its cash on hand, operating cash flows, and available credit facilities will be adequate to meet its cash needs through 2008. However, the company anticipates that these sources may not be sufficient to fund operations and debt obligations in 2009 and beyond.