Charter Communications Inc. finally filed its 10-K annual report Tuesday --
after receiving a 15-day extension from the Securities and Exchange Commission
March 31 -- and the MSO revealed that its board of directors has approved a $300
million backstop loan facility to help it meet its loan covenants.
In a conference call with analysts, CEO Carl Vogel said that with about $450
million in cash and $940 million in additional borrowing lines, Charter is able
to fund its operations through the rest of the year.
The loan, from Charter chairman Paul Allen, will be used only to ensure that
Charter will be able to meet loan covenants -- mainly interest payments on
existing debt -- going forward.
While Vogel said on the conference call that Charter is currently in
compliance with loan covenants and expects to remain in compliance, the Allen
loan gives the company a little insurance.
Charter's 10-K, eagerly awaited by the financial community, contained no
On March 31, the St. Louis-based MSO released unaudited results for 2002,
2001 and 2000 that were basically identical to the audited results filed Tuesday
-- full-year revenue was up 15 percent and cash flow rose 16 percent.
Charter changed auditors in April 2002, dropping Arthur Andersen LLP in favor
of KPMG LLP. KPMG has been conducting an intense audit of Charter's financial
statements for 2000, 2001 and 2002 practically ever since.
"Having addressed these historical financial matters through this in-depth
process, we are prepared now to look ahead and move the business forward," Vogel
said. "Management is totally committed to do just that."
Charter shareholders apparently were pleased, pushing the stock up more than
10 percent, or 12 cents per share, to $1.25 each in 4 p.m. trading.
Vogel added that Charter is still looking to asset sales as a means to pare
down debt, but there were no specific deals to announce.
In the 10-K, Charter also revealed that it is the subject of a formal
investigation by the SEC. In November, Charter said it had received an informal,
nonpublic inquiry from the SEC. That was upgraded to a formal investigation Jan.
The SEC has asked Charter for documents relating to how it counts its
customers and some of its accounting policies regarding its capitalization of
certain expenses and dealings with certain vendors, including programmers and
digital set-top terminal suppliers.
Charter also said in the 10-K that it had paid former senior vice president
of operations for the Eastern region David McCall $117,600 in 2002 as part of a
lease agreement to a partnership controlled by McCall.
In addition Charter paid $3 million to a construction company owned by
McCall's son and $644,800 to a construction company owned by McCall's
McCall resigned from Charter in January.