8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Feb 22, 2016)

Filed February 22, 2016For Securities:CHTR

Summary

On February 19, 2016, Charter Communications, Inc. (CHTR) announced through its subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp., the issuance of $1.7 billion in aggregate principal amount of 5.875% Senior Notes due 2024. These notes were sold to qualified institutional buyers and non-U.S. persons, and are guaranteed by Charter Communications, Inc. The net proceeds of approximately $1.69 billion are intended for general corporate purposes, including repaying existing debt and potentially funding a portion of the cash consideration for the previously announced acquisition of Time Warner Cable (TWC). This issuance is a significant financial event for Charter, providing liquidity to support its strategic growth and pending transformative acquisitions. Investors should note the senior unsecured nature of these notes and the company's guarantee, which will be released upon the completion of the Bright House merger. The use of proceeds indicates a focus on deleveraging and facilitating the significant TWC transaction, underscoring Charter's aggressive expansion strategy.

Key Highlights

  • 1Charter Communications subsidiaries issued $1.7 billion of 5.875% Senior Notes due 2024.
  • 2Net proceeds from the note issuance are approximately $1.69 billion.
  • 3Proceeds are earmarked for general corporate purposes, including debt repayment and funding the TWC transaction.
  • 4The notes are guaranteed by Charter Communications, Inc. on a senior unsecured basis.
  • 5The company guarantee will be released upon the merger related to the Bright House Transaction.
  • 6The issuance is made in reliance on Rule 144A and Regulation S, meaning the notes are not registered under the Securities Act.
  • 7The company entered into an Exchange and Registration Rights Agreement to allow for the exchange of these notes for registered notes within 365 days of the Bright House Transaction closing.

Frequently Asked Questions

The primary purpose is to generate liquidity for Charter Communications. The net proceeds of approximately $1.69 billion are intended for general corporate purposes, including repaying existing debt (specifically, callable 7.000% Senior Notes due 2019 and 7.375% Senior Notes due 2020) and potentially funding a portion of the cash component of the Time Warner Cable (TWC) acquisition, if TWC stockholders elect cash consideration.

The guarantee from Charter Communications, Inc. provides an additional layer of security for the holders of these senior notes. However, it's important to note that this guarantee is senior unsecured. Furthermore, the guarantee is structured to be released upon the merger of Charter Communications, Inc. into CCO Holdings, LLC, which is expected to occur upon the consummation of the previously announced Bright House Transaction.

No, these notes were sold in reliance on Rule 144A to qualified institutional buyers and outside the United States to non-U.S. persons in reliance on Regulation S. They are not registered under the Securities Act of 1933. This means they cannot be freely traded in the U.S. public markets unless registered. Charter has entered into a Registration Rights Agreement, obligating them to file a registration statement for an exchange offer within 365 days of the Bright House Transaction closing, allowing for the notes to be exchanged for substantially identical, registered notes.

Investors should be aware of several risks. The notes are general unsecured obligations of the Issuers, although guaranteed by the Company. Charter is undertaking significant transactions, including the Bright House and TWC mergers, which introduce risks such as delays in completion, failure to achieve expected synergies, integration challenges, and increased indebtedness. The Indenture also contains covenants that limit the Issuers' ability to incur additional debt, pay dividends, and make other restricted payments. A 'Change of Control' event could trigger a requirement to repurchase the notes at 101% of their principal amount.