8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Apr 27, 2016)

Filed April 27, 2016For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) reported on April 27, 2016, through its subsidiaries CCO Holdings, LLC and CCO Holdings Capital Corp., the issuance of $1.5 billion in aggregate principal amount of 5.500% Senior Notes due 2026. The net proceeds of approximately $1.49 billion are intended for the repurchase or redemption of existing senior notes, specifically the 7.000% Senior Notes due 2019, 7.375% Senior Notes due 2020, and 6.500% Senior Notes due 2021, along with associated fees and expenses, and for general corporate purposes. The issuance of these notes is a significant financing event for Charter and is closely linked to its ongoing strategic transactions, including the previously announced Bright House Transaction and Time Warner Cable (TWC) Transaction. The company has entered into an Indenture that outlines the terms of these notes, including covenants that limit its ability to incur additional debt and make restricted payments. A Registration Rights Agreement was also executed, requiring Charter to file a registration statement for an exchange offer of these notes within 365 days following the consummation or termination of the Bright House Transaction, with provisions for additional interest if this obligation is not met.

Key Highlights

  • 1Charter Communications' subsidiaries CCO Holdings issued $1.5 billion of 5.500% Senior Notes due 2026.
  • 2Net proceeds of approximately $1.49 billion will be used to redeem or repurchase existing senior notes (7.000% due 2019, 7.375% due 2020, and 6.500% due 2021).
  • 3The issuance is tied to the company's larger strategic initiatives, including the Bright House and Time Warner Cable transactions.
  • 4The new notes are senior unsecured obligations guaranteed by Charter Communications, Inc., with the guarantee to be released upon the merger of Charter into CCO Holdings.
  • 5An Indenture was established, imposing covenants that restrict additional debt, restricted payments, asset sales, and mergers.
  • 6A Registration Rights Agreement mandates Charter to register the notes for resale or exchange within 365 days post-Bright House Transaction, with penalties for non-compliance.
  • 7The notes were sold to qualified institutional buyers (Rule 144A) and non-U.S. persons (Regulation S) and are not registered under the Securities Act of 1933.

Frequently Asked Questions

The primary purpose of issuing the $1.5 billion in 5.500% Senior Notes due 2026 is to finance the repurchase or redemption of existing, higher-interest-rate senior notes (7.000% due 2019, 7.375% due 2020, and 6.500% due 2021), along with related fees and expenses. The remaining proceeds may be used for general corporate purposes.

This debt issuance is closely linked to Charter's major strategic transactions, specifically the previously announced Bright House Transaction and Time Warner Cable (TWC) Transaction. The terms of the new notes and the guarantees are impacted by the consummation and structure of these transactions, including the eventual merger into CCO Holdings.

The Indenture governing the new notes includes significant covenants that limit Charter's financial flexibility. These restrictions include limitations on incurring additional debt, paying dividends or making other restricted payments, making certain investments, granting liens, selling assets, and merging or consolidating with other entities.

Under the Registration Rights Agreement, Charter is obligated to file a registration statement for an exchange offer of these notes within 365 days following the completion or termination of the Bright House Transaction. Failure to meet this obligation will result in Charter paying additional interest to the noteholders, which escalates over time if the default persists.