01—Abstract
Summary
Summary of the 8-K filed August 21, 2018. Cited figures are marked; the original filing is the authoritative source.
Charter Communications, Inc. (CHTR) filed an 8-K on August 21, 2018, to report the completion of a new debt issuance.
Specifically, its subsidiary, Charter Communications Operating, LLC ("CCO") and Charter Communications Operating Capital Corp. issued an additional $500 milliona in aggregate principal amount of Senior Secured Floating Rate Notes due 2024. These new notes are fungible with and will form part of the same series as existing notes issued in July 2018. This debt issuance is a direct financial obligation, and the notes are senior secured obligations, guaranteed by the parent and certain subsidiaries.
The proceeds from this issuance were used to fund the closing of the sale of these notes, as previously announced. Investors should note that these notes carry floating interest rates and are secured by assets that also secure the company's credit agreement. The terms of the indenture include customary covenants and events of default.
02—Key points
Key Highlights
- Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. issued $500 million in Senior Secured Floating Rate Notes due 2024 on August 15, 2018.
- The new notes are fungible with and will be part of the same series as $400 million of existing Senior Secured Floating Rate Notes due 2024 issued on July 3, 2018.
- The notes are senior secured obligations of the Issuers and are guaranteed on a senior secured basis by the Parent Guarantor and certain subsidiary guarantors.
- The notes are secured by a *pari passu*, first priority security interest in the Issuers' and Guarantors' assets that also secure obligations under the company's credit agreement.
- The Indenture governing the notes includes covenants that limit the Issuers' ability to grant liens, sell assets, or merge/consolidate.
- Customary events of default are defined in the Indenture, including nonpayment, breach of covenants, and bankruptcy.
- The notes cannot be redeemed prior to January 1, 2024, after which they may be redeemed at par.
03—Questions
Frequently Asked Questions
What is the primary purpose of this 8-K filing?
This 8-K filing is primarily to report the completion of a new debt issuance by Charter Communications' subsidiaries. They successfully issued an additional $500 million of Senior Secured Floating Rate Notes due 2024.
Are these new notes identical to the ones issued in July 2018?
Yes, the new $500 million notes are part of the same series as the $400 million issued on July 3, 2018. They are fungible, meaning they have the same terms and conditions and will mature together in 2024.
What does it mean that the notes are 'senior secured obligations'?
Being 'senior secured obligations' means that these notes rank highly in terms of repayment priority among the company's debt. They are secured by specific assets of the company and its guarantors, and these assets are pledged as collateral. In the event of default or bankruptcy, holders of these notes have a claim on these specific assets ahead of unsecured creditors.
What are the implications of the floating rate feature?
The 'floating rate' means the interest rate on these notes is not fixed. It will adjust periodically based on a benchmark interest rate, such as LIBOR (though LIBOR is being phased out and replaced by SOFR in many cases). This means the interest expense for Charter could increase or decrease depending on market interest rate movements.
04—Continue