Cablevision Systems Corp. shares dropped more than 4% Monday after the company scrapped plans to issue a $3 billion special dividend to shareholders after finding “certain technical-covenant violations” in an existing bank-credit agreement and “certain possible technical-covenant violations under other debt instruments.”
Wall Street analysts peppered Cablevision CEO Jim Dolan and other company executives on a conference call Monday afternoon about whether Cablevision would eventually issue shareholders a special dividend after it conducts a review of its financials and agreements with banks, or if Cablevision would consider buying back some of its stock.
Dolan wouldn’t say how long the review would take or whether Cablevision would eventually issue a dividend to shareholders.
“We’re not going to put a time frame on the review. We’re going to make sure it’s absolutely thorough. We take these manners extremely seriously. We want to have them fully resolved before we go forward on any strategic action on the company’s part,” Dolan said on the conference call.
Cablevision chief financial officer Michael Huseby attributed part of the problem to “human error” involving an $18 million in “vendor-type financing” earlier this year. “The problem that we found is that it didn’t fit within the permissible debt-definition category,” Huseby said on the conference call.
Huseby emphasized that Cablevision did not expect the matter to impact reported revenue figures or projected revenue figures.
By 2 p.m. (EST) Monday, Cablevision shares were trading at $23 apiece, down $1, or 4.17%.