Summary
Charter Communications, Inc. (CHTR) has filed an 8-K report announcing a significant development in its Chapter 11 bankruptcy proceedings. On November 17, 2009, the Bankruptcy Court confirmed the Debtors' Joint Plan of Reorganization. This confirmation marks a critical step towards the company's emergence from bankruptcy, with the "Effective Date" contingent upon satisfying remaining conditions outlined in the Plan. The Plan details a comprehensive restructuring of the company's debt and equity, including the cancellation of existing common stock and the issuance of new Class A and Class B stock, preferred stock, and warrants to various creditor classes. Key to the restructuring is the treatment of different noteholders, with CCH I Notes receiving new Class A stock, CIH Notes receiving warrants, CCH Notes receiving warrants, and CCI Notes receiving preferred stock and cash. Trade creditors are expected to be paid in full. The report also highlights a "Lock-Up Agreement" with Paul G. Allen, restricting the sale of his New Class B Stock, and an "Exchange Agreement" that provides Mr. Allen and affiliated entities with rights to exchange their holdings. The company intends to fund the Plan through operational cash flow, a notes exchange, and approximately $1.6 billion from the issuance of Class A Common Stock.
Key Highlights
- 1Charter Communications, Inc. (CHTR) has received Bankruptcy Court confirmation for its Joint Plan of Reorganization, a major step in exiting Chapter 11 bankruptcy.
- 2The existing common stock of Charter Communications will be cancelled upon emergence from bankruptcy, with no recovery for current common stockholders.
- 3Various classes of noteholders will receive new equity, warrants, or cash as part of the reorganization: CCH I Notes receive New Class A Stock, CIH Notes and CCH Notes receive warrants, and CCI Notes receive preferred stock and cash.
- 4Paul G. Allen and his affiliated entities will be subject to a Lock-Up Agreement restricting the sale of their New Class B Stock until at least September 15, 2014, and will have exchange rights for their Holdco units.
- 5The reorganized company will have an initial Board of Directors of 11 members, with Mr. Allen having the right to appoint four directors, and the CEO also serving on the board.
- 6The Plan is to be funded by operational cash flow, a notes exchange, and approximately $1.6 billion from the issuance of new Class A Common Stock.
- 7Employment agreements for the CEO and COO will be assumed by the reorganized company, with compensation and benefits remaining largely unchanged or more favorable.