8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Mar 15, 2013)

Filed March 15, 2013For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) reported through its indirect subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp., the completion of a private sale of $1 billion in senior unsecured notes on March 14, 2013. The offering was divided into two tranches: $500 million of 5.25% Senior Notes due 2021 and $500 million of 5.75% Senior Notes due 2023, both issued at par. The net proceeds of approximately $987 million are intended for general corporate purposes, specifically to repay existing bank debt under the company's credit agreement. This issuance represents a significant move by Charter to refinance its debt structure. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by Charter Communications, Inc. The associated indentures include covenants that place limitations on the company's ability to incur additional debt, make restricted payments, engage in certain investments, and other actions. Investors should note the details surrounding potential redemptions, a change of control provision requiring a purchase offer at 101% of principal, and customary events of default.

Key Highlights

  • 1Completed private sale of $1 billion in senior unsecured notes on March 14, 2013.
  • 2Issuance includes $500 million of 5.25% Senior Notes due 2021 and $500 million of 5.75% Senior Notes due 2023.
  • 3Notes were issued at par, generating net proceeds of approximately $987 million after expenses.
  • 4Proceeds are earmarked for general corporate purposes, including the repayment of existing bank debt.
  • 5Charter Communications, Inc. provides a full and unconditional senior unsecured guarantee for the Notes.
  • 6Indentures impose significant covenants restricting debt incurrence, restricted payments, and other corporate actions.
  • 7A Change of Control event triggers an offer to purchase the Notes at 101% of their principal amount.

Frequently Asked Questions

The primary purpose of this $1 billion note issuance is to refinance existing debt. Charter Communications intends to use the net proceeds of approximately $987 million to repay existing bank debt under its Amended and Restated Credit Agreement.

Charter issued two tranches of senior unsecured notes: $500 million of 5.25% Senior Notes due 2021 and $500 million of 5.75% Senior Notes due 2023. Both tranches were issued at par and are guaranteed by Charter Communications, Inc.

Yes, the indentures governing these notes impose several restrictions. These include limitations on the ability to incur additional debt, make restricted payments (like dividends), engage in certain investments, create liens, and other significant corporate actions. Additionally, a Change of Control event would require the company to make an offer to repurchase the notes at 101% of their principal amount.

Under the Registration Rights Agreement, Charter has agreed to file a registration statement for an exchange offer or a shelf registration statement within 365 days. If these obligations are not met, Charter may be required to pay holders additional interest, starting at 0.25% per annum and potentially increasing to 0.50% per annum, until the registration defaults are cured.