8-KOther EventsExhibits & Filings

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Corporate Update (Jan 15, 2009)

Filed January 15, 2009For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) reported on January 15, 2009, that two of its subsidiaries, CCH I Holdings, LLC and Charter Communications Holdings, LLC, failed to make scheduled interest payments totaling $73.7 million on specific senior notes. These payments were due on January 15, 2009. This omission triggers a 30-day grace period, after which a default could occur if the payments are not made. While a default on these specific notes would not immediately trigger cross-defaults on other subsidiary debt, an acceleration of these notes, especially if totaling $100 million or more across the company, could lead to acceleration of other significant debt obligations. The company had over $900 million in cash and equivalents as of January 13, 2009, available for operating expenses, but this filing indicates potential distress in meeting its debt obligations. This situation follows the company's announcement in December 2008 of discussions with bondholders about financial restructuring to improve its balance sheet.

Key Highlights

  • 1Charter Communications subsidiaries failed to make $73.7 million in interest payments due January 15, 2009, on certain senior notes.
  • 2A 30-day grace period is in effect for these missed interest payments.
  • 3Failure to pay within the grace period could result in an event of default under the respective note indentures.
  • 4Individual note defaults would not immediately trigger cross-defaults on other subsidiary debt.
  • 5Acceleration of these notes, if aggregating $100 million or more, could lead to acceleration of other company debt.
  • 6The company announced in December 2008 it was in discussions with bondholders regarding balance sheet improvements.
  • 7As of January 13, 2009, the company held over $900 million in cash and cash equivalents for operating costs.

Frequently Asked Questions

The immediate impact is that two subsidiaries have technically missed their scheduled interest payments. However, there is a 30-day grace period for each payment. If the payments are made within this period, no default occurs. If not, an event of default could be triggered under the specific indentures for those notes.

A default on these specific notes, by itself, would not trigger cross-defaults on other subsidiary debt. However, if the principal amount of accelerated notes reaches $100 million or more across the company, it could trigger defaults and acceleration on other debt instruments. This situation, coupled with prior discussions about financial alternatives, suggests potential financial distress that could lead to restructuring or other significant actions.

As of January 13, 2009, Charter reported over $900 million in cash and cash equivalents available for operating costs. While this amount is substantial for operations, it's unclear if it is or was specifically earmarked or sufficient to cover the $73.7 million in missed interest payments and any potential penalties or fees within the grace period without impacting other critical business functions.

In December 2008, Charter announced it had initiated discussions with its bondholders to explore financial alternatives aimed at improving the company's balance sheet. This filing on missed interest payments suggests these discussions may be related to addressing the company's ability to meet its debt obligations.