8-KMaterial AgreementsFinancial EventsOther Events+1

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report, Material Agreement (Jul 10, 2019)

Filed July 10, 2019For Securities:CHTR

Summary

Charter Communications, Inc. (CHTR) subsidiaries, CCO Holdings, LLC and CCO Holdings Capital Corp. (CCOH Issuers), have completed the issuance of $750 million in aggregate principal amount of 5.375% Senior Notes due 2029. These notes are fungible with previously issued notes of the same series, bringing the total outstanding to $1.5 billion. These are unsecured, general obligations of the CCOH Issuers. Additionally, Charter's other subsidiaries, Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. (CCO Issuers), have issued $1.25 billion in aggregate principal amount of 5.125% Senior Secured Notes due 2049. The proceeds from these issuances are not explicitly detailed in this 8-K filing, but such debt issuances typically support general corporate purposes, capital expenditures, or refinancing existing debt. Investors should note the unsecured nature of the 5.375% Senior Notes, while the 5.125% Senior Secured Notes are backed by a first-priority security interest in certain assets and are guaranteed by the Parent Guarantor and other subsidiaries. Covenants within the respective indentures place limitations on future debt incurrence, restricted payments, asset sales, and other significant corporate actions for the issuing entities.

Key Highlights

  • 1Charter Communications subsidiaries issued an additional $750 million of 5.375% Senior Notes due 2029, bringing the total for this series to $1.5 billion.
  • 2These additional 2029 notes are unsecured general obligations of the CCOH Issuers and are fungible with existing notes of the same series.
  • 3Charter Communications subsidiaries also issued $1.25 billion of 5.125% Senior Secured Notes due 2049.
  • 4The 2049 Notes are senior secured obligations, guaranteed on a senior secured basis, and secured by a pari passu, first-priority security interest in specified assets.
  • 5The indentures governing these new notes contain covenants that may restrict the ability of the issuing subsidiaries to incur additional debt, make restricted payments, sell assets, or merge.
  • 6The 5.375% Senior Notes due 2029 include provisions for a make-whole premium for early redemption before June 1, 2024, and a redemption option for up to 40% of the notes using equity proceeds before June 1, 2022.
  • 7The 5.125% Senior Secured Notes due 2049 allow for redemption at a make-whole premium anytime before January 1, 2049, and at par thereafter.

Frequently Asked Questions

While this 8-K filing does not explicitly state the use of proceeds, such debt issuances are typically used for general corporate purposes, capital expenditures, potential acquisitions, or to refinance existing debt. Investors should refer to subsequent SEC filings or press releases for more specific details on fund utilization.

The $750 million of 5.375% Senior Notes due 2029 are unsecured general obligations of the CCOH Issuers. In contrast, the $1.25 billion of 5.125% Senior Secured Notes due 2049 are secured by a first-priority security interest in certain assets and are guaranteed by the parent and other subsidiaries on a senior secured basis, making them generally less risky for bondholders.

The indentures governing these notes contain covenants that impose restrictions on the issuing subsidiaries. These typically include limitations on incurring additional debt, paying dividends or making other restricted payments, selling assets, and engaging in mergers or consolidations. These covenants are designed to protect the noteholders by limiting actions that could negatively impact the issuers' ability to repay their debt.

For the 5.375% Senior Notes due 2029, in the event of a Change of Control (as defined in the indenture), the CCOH Issuers are required to make an offer to purchase all of the outstanding notes at 101% of their aggregate principal amount, plus accrued interest. This provides bondholders with a degree of protection against a significant change in the company's ownership.