8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Nov 25, 2015)

Filed November 25, 2015For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) announced on November 25, 2015, the closing of the issuance and sale of $2.5 billion aggregate principal amount of 5.750% Senior Notes due 2026 by its indirect subsidiary, CCOH Safari, LLC. The proceeds from these notes, along with other previously announced debt financings, are earmarked to fund the cash portion of the acquisitions of Time Warner Cable Inc. and Bright House Networks, LLC. These proceeds are currently held in escrow, with their release contingent upon the successful closing of the Time Warner Cable transaction. This debt issuance is a critical step in Charter's strategy to finance its significant pending acquisitions. Investors should note that the senior notes are initially obligations of an escrow issuer and will become general unsecured obligations of Charter's subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp., upon the release of escrow funds. The company has also entered into a registration rights agreement requiring an exchange offer for these notes within 365 days of the escrow release to provide registered securities to holders.

Key Highlights

  • 1Charter Communications issued $2.5 billion in 5.750% Senior Notes due 2026 via subsidiary CCOH Safari, LLC.
  • 2Net proceeds of approximately $2.5 billion are to fund the cash portion of the Time Warner Cable and Bright House Networks acquisitions.
  • 3Proceeds are held in escrow, subject to the closing of the Time Warner Cable transaction.
  • 4Upon escrow release, the notes will become unsecured obligations of CCO Holdings, LLC and CCO Holdings Capital Corp.
  • 5The Indenture includes covenants that limit Charter's ability to incur additional debt, pay dividends, and engage in other restricted activities.
  • 6A Registration Rights Agreement mandates an exchange offer for the notes within 365 days of escrow release, with potential for additional interest if not completed.
  • 7The issuance is part of a larger debt financing strategy to support the pending transformative acquisitions.

Frequently Asked Questions

The primary purpose of this $2.5 billion debt issuance is to secure a portion of the funding required for Charter Communications' previously announced acquisitions of Time Warner Cable Inc. and Bright House Networks, LLC.

Initially, the notes are obligations of CCOH Safari, LLC, an escrow issuer, and are secured by a first-priority security interest in the escrowed proceeds. Upon the release of escrow funds, which is contingent on the closing of the Time Warner Cable transaction, the notes will become general unsecured obligations of Charter's subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp. Charter Communications itself is not directly issuing these notes.

The release of the escrowed funds is primarily subject to the satisfaction of certain conditions, most importantly, the successful closing of the Time Warner Cable Transaction.

The Indenture imposes restrictions on Charter's subsidiaries regarding incurring additional debt, making restricted payments, and other financial activities, which can affect financial flexibility. The Registration Rights Agreement ensures that holders will have the opportunity to exchange these privately placed notes for registered notes within 365 days of the escrow release, with penalties for non-compliance, thereby enhancing liquidity.