Charter Communications emerges from bankruptcy, Paul Allen retains largest voting stake

Charter Communications emerges from bankruptcy

ST. LOUIS — Charter Communications Inc., the nation’s fourth largest cable operator, said Monday that it has emerged from Chapter 11 bankruptcy.

Charter, controlled by Microsoft co-founder Paul Allen, said the prearranged bankruptcy filing erased $8 billion of debt and the new company will be left with borrowings of $13 billion. Bondholders who exchanged $8 billion of debt end up owning substantially all of the newly reorganized company.

Allen’s majority stake will be reduced to 2 percent. But he will have 35 percent control of all votes — making his the largest voting interest in Charter — and gets to appoint four directors to the board.

Charter was driven to bankruptcy in March after suffering under $21.7 billion of debt amid a tight credit environment that made refinancing tough.

The cable operator piled on debt over the years to finance a spate of acquisitions. It hasn’t made a profit since going public in 1999.

But the new Charter said it expects to post positive free cash flow because lower debt levels have cut annual interest costs by more than $830 million.

In addition, Charter said it will receive $1.6 billion from an equity rights offering and exchange $1.7 billion of debt into new notes carrying a 13.5 percent interest rate due 2016.

Current debt of its CCO Holdings LLC and Charter Communications Operating LLC will be reinstated under the same pricing and maturity dates as before the bankruptcy filing.

The new Charter will apply for listing on the Nasdaq in 45 days or longer. Existing common stock in Charter has been canceled.

Charter, based in St. Louis, Mo., serves 4.9 million cable TV subscribers in 27 states.