Charter cable looking to emerge from bankruptcy

“On Monday, Charter Communications Inc. (CHTRQ) will ask the Manhattan bankruptcy court to sign off on its plan to exit Chapter 11 protection. Ahead of Monday’s hearing, the St. Louis cable company sweetened the plan for some bondholders, offering them a higher recovery on their claims.

The amended plan calls for the amount of preferred stock that holders of convertible senior notes are slated to receive to increase to $138 million from $72 million. Those bondholders, owed $497 million, will also see the dividend rate on their preferred shares increase to 17% from 15% in the fourth year of holding the stock, and to 19% in the fifth year. The mandatory redemption date on those shares will be reduced to five years from seven years, the company said.

The bondholders will also receive a $24.5 million cash payment.

Charter’s bankruptcy plan would wipe out about $8 billion in debt and would raise $3.4 billion in new debt and equity. Some bondholders would exchange $1.2 billion in notes for new notes, buy $267 million in additional notes and backstop at least a portion of a $2 billion rights offering.

Existing shareholders would be wiped out, with the exception of Microsoft Corp. (MSFT) co-founder Paul Allen, who controls Charter. He would see his voting control over the company cut to 35% from 91%.

Charter plans to reinstate the $8 billion in outstanding loans from senior lenders while leaving the pricing on the loans unchanged when it exits bankruptcy.”


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