Charter Communications Inc. took another stab at reducing its $19 billion
debt load, agreeing Friday to buy $609 million of convertible senior notes and
$1.3 billion of senior discount notes of its subsidiary Charter Communications
In a complicated transaction, Charter subsidiary CCH II will issue $1.6
billion in 10.25% notes due 2010. Exchanges are expected to occur Sept. 23.
The deal pushes maturities of one-half of Charter’s convertible debt out
another four years. Charter’s $1.3 billion in convertible debt was coming due in
2005 and 2006.
Some analysts were skeptical about the bond offering, which looks similar to
the $1.7 billion high-yield-bond deal Charter scrapped last month.
"What they’re doing is buying themselves time," Trilogy Capital Partners
principal Oren Cohen said. "All this looks like is a Hail Mary strategy to
preserve as much equity value for the current equity holders as possible,
without really doing something responsible for the balance sheet. The only way
this is at all good is if it allows the stock to rise further and they have a
strategy to sell a lot of equity at a higher stock price."
Charter CEO Carl Vogel said Friday that equitizing the converts was an option
the MSO continues to look at.