St. Louis-based Charter Communications is buying itself some fiscal breathing room, announcing plans Wednesday to consolidate and reschedule some $8 billion in outstanding loans that were coming due prior to 2009.
Charter said it intends to sell $1.5 billion of senior notes due in 2014 and to expand an existing credit facility from $5.1 billion to $6.5 billion.
Proceeds will be used to refinance bank debt at three of its subsidiaries.
The heavily indebted company has been lumbering under the pressure of interest payments on its $18 billion debt mountain and sluggish operations starved of marketing spend.
While the transaction will extend payments to 2009, company still must contend with some $1.2 billion in debt maturing between 2005 and 2007. Last month, Charter sold some cable systems for net proceeds of $735 million in much-needed cash.
Charter said it expects to retain $1 billion of unused credit after the transactions are completed.
Paul Allen, Charter’s largest shareholder and chairman, has been noticeably silent of late about the fate of the country’s third-largest cable operator.
Company recently reported 2003 sales up only 6% to $4.8 billion over 2002 mainly due to price increases for its high-speed data services rather than from strong subscriber growth.
And while most pundits believe Charter will ultimately be a takeover target if it can clean up its balance sheet, its highly fragmented customer base of 6.6 million across 40 states makes it less attractive than Adelphia or Cablevision.
Investors nevertheless cheered what they hope will be the first of several refinancing efforts, sending company’s wilting stock up a hefty 6% on the news to close at $4.72.