Charter Cable Looks to Extend Debt
The cable operator could get some near-term relief by moving the due date for $413 million in debt out by 18 years
By Jon Hemingway -- Broadcasting & Cable, 9/14/2007 9:41:00 AM
Charter Communications amended the terms of an offer to swap outstanding debt for new debt in an effort to give itself some breathing room under its heavy debt load.
The cable operator made an initial offer in August to swap 75% of existing notes due in 2009 for new notes due in 2027. Now the company hopes to make a swap for the whole issue.
Doing so will give the company some near-term relief by moving the due date for $413 million in debt out by 18 years. However, to entice bondholders into swapping for the new notes, Charter sweetened the interest rate it pays on the notes to 6.50% from 5.875% which, in turn, will increase the amount of cash it spends on interest payments every year by $27 million.
With over $19 billion in outstanding debt, Charter has been trying to get some breathing room at a time when refinancing in the corporate debt markets is extremely difficult. And it appears the company is achieving that goal. Most of Charter’s debt does not mature until after 2010 and, excluding the outstanding notes under this offer, the company has $350 million becoming due in the next two and half years. Charter does have the ability to draw up to $1.4 billion under an existing credit facility to meet funding needs.
Still, the overwhelming debt load prompted the company’s Chairman and controlling shareholder Paul Allen to consider strategies aimed at reducing leverage, which might include selling the company or some of its assets.
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