Shares of beleaguered cable giant Charter Communications soared by more than 23% on Friday after the company said it would refinance $1.7 billion worth of debt with a junk-bond offering, extending the maturities on a small portion of its hefty debt load.
Deal gives Charter some much-needed breathing room on its balance sheet, allowing the company an extra two years — until 2007 — before its first tranche of debt comes due. Shareholders had fretted that looming debt-maturities in 2005 could threaten the company’s viability.
That relief showed up on Wall Street in a very palpable way Friday, as shares of Charter skyrocketed by almost a full dollar to round out the week at $4.90. Company has been on a tear in recent months, rebounding from lows in March of less than a dollar.
Under the terms of the deal, Charter will be able to buy up about $1.1 billion worth of notes maturing in 2005 and 2006 at prices of between 80¢ and 82.5¢ on the dollar. The tender offer for that debt had already been announced.
Despite the short-term break, Charter still carries a hefty $20 billion in long-term debt on its books — a legacy of heavy spending to expand and upgrade its networks in recent years. The spending boom took its toll on most U.S. cablers in the 1990s, but Charter was among the hardest hit.