Cable Operators

Getting It Done: Charter's Schmitz Makes Deals Real

1/26/2007 7:00 PM Eastern

If cable finance executives were allowed to have catchphrases, Charter Communications' senior vice president of strategic planning Eloise Schmitz's would be “Git 'R Done.”

While that phrase is more associated with comedian “Larry the Cable Guy,” it perhaps fits Schmitz more closely. Since joining Charter in 1998 after a successful career in commercial lending, Schmitz has engineered nearly $50 billion in bank refinancings, extending debt maturities and conducting about $1 billion worth of systems sales. All the while Schmitz, 42, has quietly sat in the background, her efforts giving Charter the financial flexibility to shore up operations and roll out a telephony product. They are moves that are bringing Charter closer to industry-level financial performance — the company reported 11% revenue growth and 7% operating cash flow growth in the third quarter.

But perhaps the greatest example of Schmitz's drive dates back to 2005, when as senior vice president of finance and acquisitions, she engineered a $6.8 billion convertible debt refinancing, a deal that not only gave Charter much-needed breathing room, but also set the stage for future deals. Charter has continued to push out debt maturities — it reduced about $12 billion from the maturity profile in 2005 and 2006 — and has begun to pare down its industry-leading debt load from $19.1 billion at the end of 2005 to about $18.8 billion at the end of the third quarter.

Oh, and Schmitz engineered that 2005 deal while pregnant with twins. Two weeks after the deal was closed, she gave birth to two healthy boys, Clark and Zach. She also has a 20-year-old stepson, Karl.

Schmitz downplays her deal acumen with characteristic modesty.

“I guess I would have to credit that good old Catholic upbringing — you've got to get the job done,” Schmitz said in an interview in December. “I guess I'm just wired in a way that you don't start something that you don't intend to finish. You just get it done.”

Schmitz's ability to “get it done” was just one of the factors leading to her nomination as a Multichannel News 2007 Wonder Woman. And her colleagues in the finance sector say that the award is long overdue.

“Of all the people we know in the business, having watched her for the last couple of years, she certainly deserves it,” said Daniels & Associates chairman Brian Deevy, who has worked with Schmitz on several Charter systems sales over the years. “Go back to the bank agreements. I can't imagine a more complicated set of credit agreements. She's really a pro in her ability to manage all of that.”

Schmitz has navigated her way through one of the more complex capital structures in the cable industry. Charter consists of myriad partnerships and subsidiaries that hold various amounts of bank debt, convertible and high-yield notes and capital stock. It is a structure that few understand fully and it's part of Schmitz's job to break down that complexity into a form that Wall Street analysts and investors can understand.

Adding to the complexity is that Schmitz has reported to four different CEOs, starting with Jerry Kent in 1998 and ending with Neil Smit, who joined Charter last year.

Through it all, Schmitz has been the constant, a fact that has served as a comfort to investors, especially those that don't understand the balance sheet, said UBS Securities cable debt and equity analyst Aryeh Bourkoff.

“She is among the sharpest executives in the cable industry and understands what is perhaps the most complicated capital structure in media,” Bourkoff said. “We have exchanged ideas and discussion points around subordination of debt, ranking of debt and covenants probably more than she or I would have liked to. But they've been very helpful discussions and Eloise has certainly proven herself to be incredibly helpful to the company, to investors and to the banks. She's done a great job helping to extend the company's options and position it for a period of much stronger growth ahead.”

Schmitz hasn't always been in the cable business. After graduating from Tulane University in 1987 with a bachelor of science and management degree, Schmitz took her first job with First Union Bank (now Wachovia) in the commercial lending department. After stints in Greenville, S.C., and Charlotte, N.C., with First Union, Schmitz helped start a specialized lending group at the bank focused on the broadcast and cable industries.

“They did not have a long history in communications lending,” Schmitz said of First Union at the time.

From there she moved back to St. Louis, taking a job with Mercantile Bank and helping to start up a similar lending division for broadcasting and cable companies. While at Mercantile, one of Schmitz' bigger clients was Charter. Charter co-founder Barry Babcock was a member of the bank's board of directors and recruited Schmitz to join Charter in 1998.

Charter wasted little time in throwing Schmitz head first into the fray. Her first day at Charter was spent in New York, listening to investment bank pitches to take the company public.

“In between the pitches we got a phone call from [Microsoft co-founder] Paul Allen,” Schmitz said. “By the end of the second day [on the job] we were discussing the price in between the pitches and by the third day the company was sold. I had started with Charter and before I even got to my office, we had sold the company.”

Schmitz then shifted gears, working on the due diligence process during the sale of the company to Allen. The deal, completed in 1999, was worth an estimated $4.5 billion.

“I remember saying to Barry [Babcock], 'I just hope that I'm still here a year from now,'” Schmitz said. “I was afraid they were going to kick me out.”

After the deal was consummated, Schmitz's focus shifted again to acquisitions. Schmitz also began work on Charter's $3.2 billion initial public offering, then the fourth largest IPO in history.

While a lot of the heavy lifting in shoring up Charter's balance sheet is completed at least for the short term, Schmitz said that she is constantly looking for ways to improve Charter's debt profile and providing the company with the necessary leg room to accomplish its operational objectives.

Schmitz said she balances her professional life with caring for her 14-month-old sons and helping her husband Frank, a successful St. Louis restaraunteur, in his business. Frank Schmitz owns the popular St. Louis Spanish tapas restaurant BARcelona and has interests in two other local eateries. BARcelona is currently expanding into Indianapolis and Cincinnati, she said.

Early on she helped her husband with decorating the restaurants, did the eateries' books and by day hammered out finance deals for Charter.

“Needless to say we have a fine bookkeeper for the restaurants now,” she said.

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