Cable MSO Charter Communications (NASDAQ:CHTR, news, filings) finally cried uncle yesterday, coming to an agreement with its debt holders to restructure its debt load through a prepackaged bankruptcy. The company's future had been looking quite dim lately, at least for common shareholders, due to the frozen credit markets and Charter's coming debt maturities.
In the agreed upon deal which involves a Chapter 11 bankruptcy filing by April, some $8B of Charter's debt would be converted to equity leaving about $12B in place. Common shareholders would come away with nothing. Of course, mogul Paul Allen will still emerge as the largest shareholder, although hopefully somewhat humbled by the experience. The company still has $800M in cash, which will give it the flexibility it needs as it goes through the courts.
As disappointing as this is for shareholders, perhaps the company will be able to finally emerge from this restructuring to become what it once dreamed to be. That would be good for competition and for the employees - eventually anyway. Of course, this deal is not guaranteed to go through, someone theoretically could make a better offer. But in this market Charter's debt load is better than any poison pill.
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