Charter Communications announced the results of its exchange offer for $413 million of the company’s 5.875% convertible senior notes due 2009 for 6.5% notes due in 2027, adding that about 88% of the notes were tendered for exchange.
In a statement, Charter said that $364 million of the existing convertible notes were validly tendered. Following the consummation of the offer – expected on Oct. 2 -- $49 million of the principal amount of the 2009 convertible notes will remain outstanding. In the aggregate, Charter will issue about $479 million in new convertible notes.
Charter first announced the tender offer on Aug. 29, when it planned to swap about three-quarters of the 2009 notes ($309 million) for $595 million in the new notes. On Sept. 14 the company amended the offering, stating it would exchange $413 million of the 2009 notes for the new debt, increasing the total amount of the offering to $793 million.
According to Charter, on Oct. 2, holders of the existing convertible notes will receive $1,317.01 principal amount of the new notes and $22.19 in cash for accrued interest from May 16, 2007 per $1,000 principal amount of the old notes.
The new notes also will have an initial conversion price of $3.41 per share compared to the $2.42 conversion price associated with the earlier offer.
“Given the far higher conversion price of the new converts ($3.41 vs. $2.42), equity dilution has been reduced by nearly 1.5% as a result of the convert exchange and [Charter] has eliminated virtually all of its maturities through 2009,” Pali Research media analyst Richard Greenfield wrote in a research note.