8-KOther EventsExhibits & Filings

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Corporate Update (Sep 14, 2007)

Filed September 14, 2007For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) announced through its subsidiary Charter Communications Holding Company, LLC (Holdco) an amendment and extension of its offer to exchange outstanding 5.875% convertible senior notes due 2009 (the 'Old Notes') for new 6.50% convertible senior notes due 2027 (the 'New Notes'). This amendment significantly increases the potential principal amount of New Notes to be issued from $595 million to up to $793 million, and it lowers the interest rate on the New Notes from 7.00% to 6.50%. Additionally, the conversion premium for the New Notes has been adjusted from 40% to 30%. The exchange offer, now set to expire on September 27, 2007, aims to address Charter's outstanding $413 million in Old Notes. The revised terms present a more attractive opportunity for existing noteholders to swap their older, lower-coupon notes for new ones with a higher coupon and a lower conversion premium, thereby potentially reducing Charter's near-term debt obligations and extending its maturity profile. Investors should evaluate the attractiveness of the new notes' terms relative to holding the existing notes.

Key Highlights

  • 1Charter's subsidiary, Holdco, amended and extended its offer to exchange existing 5.875% convertible senior notes due 2009 for new 6.50% convertible senior notes due 2027.
  • 2The maximum principal amount of new notes to be issued has been increased to $793 million, up from a previous limit of $595 million.
  • 3The coupon rate on the new notes has been reduced from 7.00% to 6.50%.
  • 4The initial conversion premium for the new notes has been lowered from 40% to 30%.
  • 5The exchange offer, which pertains to Charter's $413 million in outstanding Old Notes, has been extended and will now expire on September 27, 2007.
  • 6The amended offer aims to provide a more favorable exchange for existing noteholders by offering a higher coupon and a lower conversion premium on the new debt.

Frequently Asked Questions

This 8-K filing announces that Charter Communications' subsidiary, Holdco, has amended and extended its offer to exchange existing convertible senior notes due 2009 for new convertible senior notes due 2027. The changes are designed to make the exchange offer more attractive to existing noteholders.

The most significant changes include an increase in the maximum principal amount of new notes that can be issued (up to $793 million from $595 million), a decrease in the coupon rate on the new notes (from 7.00% to 6.50%), and a reduction in the conversion premium (from 40% to 30%). The exchange offer deadline has also been extended to September 27, 2007.

By encouraging more holders of the 2009 notes to exchange them for 2027 notes, Charter aims to extend its debt maturity profile and potentially reduce its near-term refinancing needs. The higher coupon on the new notes means higher interest payments going forward, but the extended maturity can provide more financial flexibility.

The conversion premium is the percentage by which the market price of the underlying stock must increase before an investor can break even on the conversion of a convertible bond. A lower conversion premium (like the 30% offered here) makes the conversion feature of the new notes more attractive to investors, as they require a smaller increase in Charter's stock price to realize value from converting the notes into equity.