Charter filing for Chapter 11 by April 1

Paul Allen will continue as an investor

NEW YORK -- Paul Allen's Charter Communications will make a Chapter 11 bankruptcy filing by April 1, unveiling Thursday an agreement-in-principle with certain of its debt holders on a financial restructuring that will reduce the cable operator's debt by about $8 billion.

As part of the agreement, current chairman Allen will continue as an investor and will retain the largest voting interest in the company, Charter said.

Officials said the arrangement is not quite a prepackaged Chapter 11 filing, but a hybrid between a prepackaged and a regular filing that should nonetheless allow Charter to move through the bankruptcy process more swiftly. One source said in some cases like this, companies can emerge from bankruptcy within months, depending on how the legal process works out.

Charter shares tanked after the news as regular shareholders will get wiped out in the bankruptcy process. Charter said debt and bond holders will receive new notes, equity and cash, depending on their seniority. Shareholders will not receive anything for their common stock, which will be canceled.

St. Louis-based Charter said it intends to implement its financial restructuring through a Chapter 11 filing on or before April 1. The agreement-in-principle contemplates paying trade creditors in full, it said. As of Wednesday, Charter had about $800 million in cash and cash equivalents available to it.

Also, two of its subsidiaries have agreed to make within a grace period that ends Sunday interest payments totaling about $74 million on senior notes.

"We are pleased to have reached an agreement with such a significant portion of our bondholders on a long-term solution to improve our capital structure," Charter president and CEO Neil Smit said. "We are committed to continuing to provide our 5.5 million customers with quality cable, Internet and phone service, and through this agreement, we will be even better positioned to deliver the products and services our customers demand now and in the future."

Charter on Thursday also reported preliminary fourth-quarter pro forma revenue growth of about 7% and pro forma adjusted operating cash flow growth of more than 10%.

The company said it lost 75,100 basic video customers, more than it lost in the prior-year's fourth quarter. It gained 63% fewer digital video customers 55% fewer high-speed Internet customers.

The company said it expects a $1.5 billion goodwill writedown to be taken for the fourth quarter, and said capital spending would be about $264 million, 25% lower than a year earlier.
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