SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): March 27, 2009
Charter Communications,
Inc.
(Exact name of registrant as
specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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000-27927
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43-1857213
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(Commission File
Number)
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(I.R.S.
Employer Identification
Number)
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12405
Powerscourt Drive
St. Louis, Missouri 63131
(Address of principal executive
offices including zip code)
(314)
965-0555
(Registrant's telephone number,
including area code)
Not
Applicable
(Former name or former address, if
changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
1.03 BANKRUPTCY OR RECEIVERSHIP.
On
March 27, 2009, Charter Communications, Inc. (the “Company”), and certain of its
subsidiaries (collectively, the “Debtors”) filed voluntary petitions in the
United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”) seeking relief under the provisions of Chapter 11 of Title
11 of the United States Code (the “Bankruptcy Code”). The Chapter 11 cases
are being jointly administered under the caption In re Charter Communications,
Inc., et al., Case No. 09-11435 (the “Chapter 11 Cases”). The Debtors will
continue to operate their businesses and manage their properties as debtors in
possession under the jurisdiction of the Bankruptcy Court and in accordance with
the applicable provisions of the Bankruptcy Code.
ITEM
2.04 TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION
OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT.
The
filing of the Chapter 11 Cases described in Item 1.03 above triggered the
acceleration of financial obligations under the terms of a number of debt
instruments of the Debtors (the “Debt Documents”). The Debtors
believe that any efforts to enforce the financial obligations under the Debt
Documents are stayed as a result of the filing of the Chapter 11 Cases in the
Bankruptcy Court. The Debt Documents and the approximate principal amount of
debt currently outstanding thereunder are as follows:
1. $3
million of 5.875% convertible senior notes due 2009 of the Company;
2. $479
million of 6.50% convertible senior notes due 2027 of the Company;
3. $53
million of 10.000% senior notes due 2009 of Charter Communications Holdings,
LLC;
4. $4
million of 10.750% senior notes due 2009 of Charter Communications Holdings,
LLC;
5. $25
million of 9.625% senior notes due 2009 of Charter Communications Holdings,
LLC;
6. $1
million of 10.250% senior notes due 2010 of Charter Communications Holdings,
LLC;
7. $1
million of 11.750% senior discount notes due 2010 of Charter Communications
Holdings, LLC;
8. $47
million of 11.125% senior notes due 2011 of Charter Communications Holdings,
LLC;
9. $60
million of 13.500% senior discount notes due 2011 of Charter Communications
Holdings, LLC;
10. $51
million of 9.920% senior discount notes due 2011 of Charter Communications
Holdings, LLC;
11. $69
million of 10.000% senior notes due 2011 of Charter Communications Holdings,
LLC;
12. $54
million of 11.750% senior discount notes due 2011 of Charter Communications
Holdings, LLC;
13. $75
million of 12.125% senior discount notes due 2012 of Charter Communications
Holdings, LLC;
14. $151
million of 11.125% senior notes due 2014 of CCH I Holdings, LLC;
15. $581
million of 13.500% senior discount notes due 2014 of CCH I Holdings,
LLC;
16. $471
million of 9.920% senior discount notes due 2014 of CCH I Holdings,
LLC;
17. $299
million of 10.000% senior notes due 2014 of CCH I Holdings, LLC;
18. $815
million of 11.750% senior discount notes due 2014 of CCH I Holdings,
LLC;
19. $217
million of 12.125% senior discount notes due 2015 of CCH I Holdings,
LLC;
20. $3.987
billion of 11.00% senior notes due 2015 of CCH I, LLC;
2
21. $1.860
billion of 10.250% senior notes due 2010 of CCH II, LLC;
22. $614
million of 10.250% senior notes due 2013 of CCH II, LLC;
23. $800
million of 8 3/4% senior notes due 2013 of CCO Holdings, LLC;
24. $1.1
billion of 8.000% senior second-lien notes due 2012 of Charter Communications
Operating, LLC;
25. $770
million of 8 3/8% senior second-lien notes due 2014 of Charter Communications
Operating, LLC;
26. $546
million of 10.875% senior second-lien notes due 2014 of Charter Communications
Operating, LLC;
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27.
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$8.2
billion of loans due 2014 under the Amended and Restated Credit Agreement,
dated as of March 6, 2007, among Charter Communications Operating, LLC,
CCO Holdings, LLC, the lenders from time to time parties thereto and
JPMorgan Chase Bank, N.A., as administrative agent; and
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28.
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$350
million of loans due 2014 under the Credit Agreement, dated as of March 6,
2007, among CCO Holdings, LLC, the lenders from time to time parties
thereto and Bank of America, N.A., as administrative
agent.
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ITEM
5.02 DEPARTURE OF
DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN
OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
On March
25, 2009, the Company appointed Gregory L. Doody as its Chief Restructuring
Officer and Senior Counsel in connection with the filing of the Chapter 11 Cases
until the earlier of (i) the date that the Employment Agreement (as defined
below) is terminated by either party and (ii) the effective date of the
Company’s Chapter 11 plan of reorganization. Mr. Doody, age 44,
served as Executive Vice President, General Counsel and Secretary of Calpine
Corporation from July 2006 through August 2008. Prior to joining
Calpine Corporation, Mr. Doody held various positions, including Executive Vice
President, General Counsel and Secretary at HealthSouth Corporation from July
2003.
Mr.
Doody’s services as Chief Restructuring Officer are provided to the Company
pursuant to an Employment Agreement, dated March 25, 2009 (the “Employment
Agreement”), between the Company and Mr. Doody, pursuant to which the Company
has retained Mr. Doody in connection with its Chapter 11
restructuring. Under the Employment Agreement, the Company agreed to
pay Mr. Doody a base salary at a monthly rate of not less than $60,000 (the
“Base Salary”) to evaluate and implement strategic and tactical options through
the process of restructuring the Company’s balance sheet, among other
duties. The Employment Agreement also provides for an emergence bonus
of $1,500,000 (the “Emergence Bonus”) reduced by (y) the sum of (i) the
aggregate amount of Base Salary paid to Mr. Doody during his term of employment,
(ii) the aggregate amount of “Monthly Fees” paid to Dumaine Advisors LLC
(“Dumaine”) pursuant to the Consulting Agreement dated January 16, 2009 by and
between the Company and Dumaine (the “Consulting Agreement”), and (iii) the
$75,000 retainer paid by the Company to Dumaine pursuant to the Consulting
Agreement (the “Retainer”). Notwithstanding the foregoing, the
Company’s Chief Executive Officer may, in his sole and absolute discretion,
reduce the Emergence Bonus to any amount, including zero dollars ($0.00), at any
point prior to the date of emergence from bankruptcy, provided that Mr. Doody is
not required to repay the Base Salary, and Dumaine is not required to repay any
Monthly Fees or the Retainer, previously received.
ITEM
7.01 REGULATION FD.
In connection with the Chapter 11
Cases, the Company has made information available on its website (www.charter.com under the “Investor and News Center”
tab), including its proposed plan of reorganization and disclosure statement
describing the terms of the plan of reorganization and other information
concerning the Company. A copy of a press release announcing the
filing of the voluntary petitions is attached hereto as
Exhibit 99.1.
3
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
The
following exhibits are filed with this report and incorporated by reference
herein:
| Exhibit No. | Description | |
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99.1
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Press
release, dated March 27,
2009.
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4
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this Current Report to be signed on its behalf by the undersigned
hereunto duly authorized.
CHARTER
COMMUNICATIONS, INC.
By: /s/ Kevin D.
Howard
Date:
March 27,
2009
Name: Kevin D. Howard
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#160;
Title: Vice President, Controller and Chief Accounting Officer
EXHIBIT INDEX
| Exhibit No. | Description | |
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99.1
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Press
release, dated March 27,
2009.
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Exhibit
99.1
NEWS
FOR
RELEASE: March 27, 2009
Charter
Communications Commences Previously Announced
Pre-Arranged
Financial Restructuring
Company’s
debt expected to be reduced by approximately $8 billion; includes $3 billion
refinancing and new equity capital
Operations
to continue as usual under Pre-Arranged Plan
Trade
creditors to be paid in full under Pre-Arranged Plan
St. Louis, MO – Charter
Communications, Inc. (NASDAQ: CHTR) and its subsidiaries (“Charter” or the
“Company”) today commenced the next phase of its previously announced financial
restructuring, which is expected to reduce the Company’s debt by approximately
$8
billion. As announced on February 12, 2009, the Company reached
agreements-in-principle with members of a committee of certain of the Company’s
debt holders (collectively, the “Bondholder Committee”). These
agreements-in-principle contemplate the investment by members of the Bondholder
Committee of more than $3 billion, including up to $2 billion in equity
proceeds, $1.2 billion in roll-over debt and $267 million in new debt to support
the overall refinancing. Charter expects the proposed restructuring to position
the Company to generate positive free cash flow through significant interest
expense reductions. The Company has been working closely with the
Bondholder Committee to finalize a pre-arranged plan of reorganization and
related documents and agreements based upon the agreements-in-principle (the
“Pre-Arranged Plan”).
Consistent with the terms of the
agreements-in-principle, Charter today filed its Pre-Arranged
Plan and Chapter 11 petitions in the United States Bankruptcy Court for the
Southern District of New York. Charter’s Pre-Arranged Plan is
supported by Paul G. Allen and affiliates of Paul G. Allen and by the Bondholder
Committee consisting of (a) parties holding approximately 73% in principal
amount of the 11.00% Senior Secured Notes due 2015 of CCH I, LLC and (b) parties
holding approximately 52% in principal amount of the 10.25% Senior Notes due
2010 and 2013 of CCH II, LLC. As previously announced, Paul G. Allen
will continue as an investor, and will retain the largest voting interest in the
Company. The Pre-Arranged Plan calls
for the
reinstatement of the current debt of Company subsidiaries CCO Holdings, LLC and
Charter Communications Operating, LLC. The Company has paid, and intends
to continue to pay, on a current basis in accordance with existing terms on the
secured debt. The unsecured notes at CCO Holdings, LLC will continue to
accrue interest that will be paid upon emergence.
“The financial restructuring is good
news for Charter and our customers and, if approved, will result in Charter
being better positioned to deliver the products and services our customers
demand now and in the future,” said Neil Smit, President and Chief Executive
Officer. “The support of our bondholders and their new investment in
Charter also underscores their confidence in our company and
business. Charter’s operations are strong, and throughout this
process, we will continue serving our customers as usual. We look
forward to an expeditious restructuring, and once completed, we believe that
Charter will be a stronger company.”
Charter
expects that cash on hand and cash from operating activities will be adequate to
fund its projected cash needs as it proceeds with its financial restructuring
and therefore does not intend to seek debtor-in-possession (DIP)
financing.
In
conjunction with today’s filing, the Company also filed a variety of customary
motions to continue to support its employees, customers and vendors during the
financial restructuring process. The Company has filed motions
seeking permission to continue employee wage and benefits programs and honor
current customer programs without interruption, and to pay trade creditor
balances and fees to Local Franchise Authorities incurred before and after the
filing in full and in the normal course.
Charter
has retained Kirkland & Ellis LLP as legal counsel, Lazard as financial
advisor and AlixPartners LLP as restructuring advisor.
The
Bondholder Committee is represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP as legal counsel, and its financial advisors are Houlihan Lokey
Howard & Zukin Capital, Inc. and UBS Securities LLC.
Charter
also appointed Gregory L. Doody as its Chief Restructuring
Officer. In this role, Mr. Doody will help oversee the financial
restructuring process, thereby minimizing the impact of the restructuring
process on Charter’s day-to-day operations. He has led successful
in-court and out-of-court restructurings, including Calpine Corporation and
HealthSouth Corporation.
On March
16, 2009, Charter Communications, Inc. filed its Annual Report on Form 10-K with
the Securities and Exchange Commission, which contained a going concern
modification to the audit opinion from its independent registered public
accounting firm. Further details are available in the Company’s
10-K.
The
Company’s principal Chapter 11 petition has been assigned case number
09-11435. Additional information about Charter’s restructuring,
including the disclosure statement describing the Pre-Arranged Plan and the
terms of the committed and optional investments by members of the Bondholder
Committee, is available at the Company’s website www.charter.com. You
may also receive information from the Company’s restructuring information line,
800-419-3922. For access to Court documents and other general
information about the Chapter 11 cases, please visit
www.kccllc.net/charter.
This
release is not intended as a solicitation for a vote on the Pre-Arranged
Plan.
About
Charter Communications
Charter
Communications, Inc. is a leading broadband communications company and the
fourth-largest cable operator in the United States. Charter provides a full
range of advanced broadband services, including advanced Charter Digital
Cable(R) video entertainment programming, Charter High-Speed(R) Internet access,
and Charter Telephone(R). Charter Business(TM) similarly provides scalable,
tailored, and cost-effective broadband communications solutions to business
organizations, such as business-to-business Internet access, data networking,
video and music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the Charter Media(R)
brand. More information about Charter can be found at
www.charter.com.
Cautionary
Statement Regarding Forward-Looking Statements:
This
release includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding, among other things, our plans,
strategies and prospects, both business and financial. Although we believe that
our plans, intentions and expectations reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and assumptions
including, without limitation, the factors described under "Risk Factors" from
time to time in our filings with the Securities and Exchange Commission ("SEC").
Many of the forward-looking statements contained in this release may be
identified by the use of forward-looking words such as "believe," "expect,"
"anticipate," "should," "plans," "will," "may," "intend," "estimated," "aim,"
"on track," "target," "opportunity" and "potential," among others. Important
factors that could cause actual results to differ materially from the
forward-looking statements we make in this release are set forth in other
reports or documents that we file from time to time with the SEC, including our
quarterly reports on Form 10-Q filed in 2008 and our most recent annual report
on Form 10-K, and include, but are not limited to:
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the
completion of the Company's restructuring including the outcome and impact
on our business of the proceedings under Chapter 11 of the Bankruptcy
Code;
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the
ability of the Company to satisfy closing conditions under the
agreements-in-principle and Pre-Arranged Plan and related documents and to
have the Pre-Arranged Plan confirmed by the bankruptcy
court;
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the
availability of and access to, in general, funds to meet interest payment
obligations under our debt and to fund our operations and necessary
capital expenditures, either through cash on hand, cash flows from
operating activities, further borrowings or other
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our
ability to comply with all covenants in our indentures and credit
facilities, any violation of which, if not cured in a timely manner, could
trigger a default of our other obligations under cross-default
provisions;
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our
ability to repay debt prior to or when it becomes due and/or successfully
access the capital or credit markets to refinance that debt through new
issuances, exchange offers or otherwise, including restructuring our
balance sheet and leverage position, especially given recent volatility
and disruption in the capital and credit
markets;
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the
impact of competition from other distributors, including incumbent
telephone companies, direct broadcast satellite operators, wireless
broadband providers, and digital subscriber line ("DSL")
providers;
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difficulties
in growing, further introducing, and operating our telephone services,
while adequately meeting customer expectations for the reliability of
voice services;
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our
ability to adequately meet demand for installations and customer
service;
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our
ability to sustain and grow revenues and cash flows from operating
activities by offering video, high-speed Internet, telephone and other
services, and to maintain and grow our customer base, particularly in the
face of increasingly aggressive
competition;
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our
ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming
costs;
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general
business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy;
and
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the
effects of governmental regulation on our
business.
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All
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by this cautionary statement. We are
under no duty or obligation to update any of the forward-looking statements
after the date of this release.
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Contacts:
Media:
Anita
Lamont, 314-543-2215
Charter
Communications, Inc.
Andy
Brimmer / Sharon Stern
Joele
Frank, Wilkinson Brimmer Katcher
212-355-4449
or
Analysts:
Mary Jo
Moehle, 314-543-2397
Charter
Communications, Inc.