8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Nov 10, 2014)

Filed November 10, 2014For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) announced on November 10, 2014, the issuance of $3.5 billion in aggregate principal amount of Senior Notes through its subsidiary, CCOH Safari, LLC. This includes $1.5 billion of 5.500% Senior Notes due 2022 and $2.0 billion of 5.750% Senior Notes due 2024. The net proceeds, totaling approximately $3.46 billion after expenses, are earmarked to fund significant previously announced transactions with Comcast Corporation, specifically an asset purchase, asset exchange, and contribution/spin-off, as well as related fees, expenses, and general corporate purposes. The offering was made under an automatic shelf registration statement. Importantly, the gross proceeds from the note issuance are being held in escrow. The release of these funds is contingent upon the satisfaction of certain conditions, most notably the successful closing of the aforementioned transactions with Comcast. Substantially concurrently with the escrow release, the notes will become obligations of other Charter subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp., with Charter Communications, Inc. providing full and unconditional guarantees. The filing also notes that the notes are subject to special mandatory redemption if the Comcast transactions do not close by November 5, 2015, or are terminated earlier. Additionally, the company is making extensive disclosures regarding the terms of the indentures and escrow agreement, including covenants that limit the ability to incur additional debt, make restricted payments, and outline events of default and potential change of control provisions.

Key Highlights

  • 1Charter Communications issued $3.5 billion in Senior Notes: $1.5 billion of 5.500% Senior Notes due 2022 and $2.0 billion of 5.750% Senior Notes due 2024.
  • 2Proceeds totaling approximately $3.46 billion (net of expenses) will fund significant transactions with Comcast Corporation.
  • 3The note issuance is contingent on the closing of the Comcast transactions; funds are held in escrow until these conditions are met.
  • 4The notes are guaranteed by Charter Communications, Inc., and will ultimately become obligations of specific Charter subsidiaries (CCOH Holdings, LLC and CCO Holdings Capital Corp.) post-escrow release.
  • 5Special mandatory redemption provision requires the notes to be redeemed at 100% of the issue price plus accrued interest if the Comcast transactions do not close by November 5, 2015.
  • 6The Indentures include covenants that restrict additional debt, restricted payments, investments, liens, asset sales, and affiliate transactions.
  • 7A Change of Control provision mandates an offer to purchase the notes at 101% of principal amount plus accrued interest.

Frequently Asked Questions

The primary purpose of issuing these Senior Notes is to raise capital to fund Charter's previously announced asset purchase, asset exchange, and contribution/spin-off transactions with Comcast Corporation. The net proceeds will also cover related fees, expenses, and general corporate purposes.

No, the gross proceeds from the note issuance are held in escrow. These funds will only be released to Charter upon the satisfaction of certain conditions, most critically the successful closing of the transactions contemplated with Comcast Corporation.

If the Comcast transactions do not close by November 5, 2015, or if they are terminated earlier under specific circumstances, the Notes will be subject to a special mandatory redemption. This means the issuing subsidiary will be required to redeem all outstanding Notes at 100% of their initial issue price, plus accrued and unpaid interest.

The Indentures governing these notes impose several significant restrictions. These include limitations on the ability of Charter and its subsidiaries to incur additional debt, issue preferred stock, pay dividends or make other restricted payments, make certain investments, create liens, sell assets, merge with other entities, and enter into transactions with affiliates. These covenants are designed to protect the holders of the notes.