Charter Amends Debt Offering

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Charter Communications has amended a previously announced tender offer for its convertible senior notes, offering to exchange all $413 million of the convertible debt due in 2009 and increasing the total amount of the offering from $595 million to $793 million.

According to Charter, the amendments also include lowering the coupon on the debt from 7% to 6.5% and adjusted the initial conversion premium from 40% to 30%. In addition, Charter said it extended the expiration date of the offer by one day to Sept. 27.

Charter first announced the debt offering on Aug. 29, where it would essentially swap about three-quarters of the 2009 notes ($309 million) for $595 million in 6.5% convertible notes due 2027. The deal would require Charter to pay higher interest for the debt, but would push out the maturity of those notes for almost 20 years, giving the company more liquidity.

Miller Tabak media analyst David Joyce said in a research note that the amended offering is worse for Charter because it boosts the number of potential shares the company would have to issue upon conversion – to about 38 million – and increases interest expense by about $4 million. Nevertheless, Joyce reiterated his buy rating on the stock and his $4 per share 12-month price target.

With $19.6 billion in debt, Charter is the most highly-leveraged cable company in the industry.The company has made significant moves in the past two years to reduce debt, extend maturities and provide it with additional liquidity to fund the rollout of new services, especially telephony.

The move comes just weeks after chairman Paul Allen revealed in a Securities and Exchange Commission filing that he was considering several options for the St. Louis-based cable operator, including taking it private.

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