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February 11, 2005
Mail Stop 0407
Curtis S. Shaw, Esq.
Executive Vice President, General Counsel, and Secretary
Charter Communications, Inc.
12405 Powerscourt Drive
St. Louis, Missouri 63131
RE: Charter Communications, Inc.
Amendment No. 1 to Registration Statement on Form S-1
File No. 333-121136
Filed February 1, 2005
Charter Communications, Inc.
Amendment No. 1 to Registration Statement on Form S-1
File No. 333-121561
Filed February 7, 2005
Dear Mr. Shaw:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
* * * * *
Amendment No. 1 to Form S-1 (333-121136)
1. We note your response to our prior comment #2 and the stock
lending arrangement labeled "Alternative Two" on the supplemental
chart.
Supplementally,
* Advise whether the "Equity Investors" have already been
identified;
* Explain why Citigroup expects the Equity Investors to want to
lend
shares back to Citigroup;
* Explain the business reasons for structuring Citigroup`s
borrowings
of the Equity Investors` shares (i.e. the Equity Investors Stock
Loan) and 5.875% note holders` borrowings and sales of shares
(i.e.
the Convertible Investors Stock Loan) to occur 15 times in 10
million
share increments. Are these transactions going to occur at
different
dates over the term of the Share Lending Agreement?
* Advise whether the Equity Investors will receive a fee in
exchange
for lending the shares to Citigroup and clarify the economic
reasons
why the Equity Investors would lend the shares to Citigroup; and
* Explain whether Citigroup can close out its borrowings from the
Equity Investors through any means other than the return of the
Class
A shares (e.g. in the form of cash). Explain how the 5.875% note
holders will obtain the Class A shares needed to close out their
borrowings from Citigroup (e.g. purchases in the open market).
We may have further comments after reviewing your response.
2. We note your response to our prior comment #3, particularly
your
statement that "[i]f market conditions do not permit the sale of
all
150 million shares covered by the Share Lending Agreement, the
Company would expect to file one or more new registration
statement
on Form S-1 or S-3, as applicable, to cover the offering or
offerings
of the remaining unborrowed shares." We also note the statement
in
your Underwriting section that the underwriters may change the
public
offering price if all the shares are not sold at the initial
offering
price. Based upon these statements, we continue to believe that
your
offering is a continuous best efforts offering covered by Rule
415(a)(1)(x). Please revise the disclosure in the registration
statement to make clear that all 150 million shares may not be
sold
in the offering.
3. We note your response to our prior comment #3. Please
elaborate
on your statement that "in light of the quarterly accrual, rather
than payment, of certain priority distributions during 2004 by a
subsidiary of the Company, the Company`s eligibility to use Form
S-3
is not certain." Identify the subsidiary, clarify the nature of
the
prior distributions, and explain how you believe this affected
your
eligibility to use Form S-3. In this regard, we note your
statement
on page 72 that you are in compliance with all your indentures and
credit facilities.
4. Please be advised that the Office of Chief Counsel is
continuing
its review of your transaction and may issue additional comments.
We and our subsidiaries have a significant amount of debt and
may...,
page 8
5. Make clear that it is likely that the company will require
additional funding to repay debt maturing in 2006.
6. We note your response to our prior comment #15 and your
disclosure
on page 129. Please clarify in the risk factor that if the
Special
Committee is not able to resolve the dispute through mediation in
the
Delaware Chancery Court`s mediation program, it intends to
recommend
that the Board take legal action against Mr. Allen to resolve the
contract dispute.
The loss of any of our key executives could adversely affect our
ability to manage our business, page 15
7. Revise this general risk factor to specifically address the
risk
to your company stemming from the recent departure of your CEO.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 39
8. We note your response to prior comment #30 and statements made
by
your interim CEO Robert May as quoted in The Wall Street Journal
Online on January 18, 2005. It appears that Mr. May`s statement
that
"[y]ou need to have huge amounts of credibility with your
customers
that you know what you`re doing and that you`re doing it well...I
think over the recent past we have not always lived up to that
expectation" should be addressed in MD&A to the extent it reflects
a
change in management`s plan in operating the company.
Furthermore,
clarify how the listed transactions on page 81 were designed to
improve your balance sheet and liquidity.
Liquidity and Capital Resources, page 71
9. Overview, page 72. We note your response to our prior comment
#35. Please disclose in the prospectus, as stated in your
supplemental response, that management currently does not consider
future asset sales as a significant source of liquidity.
Share Lending Agreement, page 179
10. Please refer to the third full paragraph on page 179 ("Because
there were not sufficient shares..."). You state that you agreed
to
lend CGML up to 150,000,000 Class A shares "on one or more
occasions"
prior to November 16, 2006. We further note your response to our
prior comment #3. Nevertheless, in light of the fact that the
current registration statement is offering all 150 million shares
that Citigroup can potentially borrow under the Share Lending
Agreement, we believe that such language mistakenly suggests to
readers that Citigroup may not borrow all 150 million shares that
are
being offered in the current prospectus, thereby creating
unnecessary
confusion. Please clarify that the parties have agreed to offer
all
150 million shares at once.
11. Clarify the time period that sales of the 150 million shares
will
take place and note holders and the time period for hedging
transactions among Citigroup, note holders and Equity Investors.
12. We note your response to prior comment #43 regarding your
conclusion that the share lending agreement is an implied forward
purchase contract. It is unclear how you reached this conclusion.
We will continue to evaluate this response and may have further
comment.
Underwriting, page 181
13. We note your response to our prior comment #45 regarding the
electronic delivery of prospectuses. Please provide us with
copies
of any materials (e.g. emails, screenshots of webpages) that will
be
used under the i-Deal system to communicate with the potential
purchasers. We may have further comments after our review.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 3. Franchises and Goodwill, page F-60
14. We note your disclosure on page 88 that you conduct your
business in four operating divisions. This appears to be a change
from prior versions of the S-1. Tell us when the change from five
to
four operating divisions occurred and the business rationale
behind
this further consolidation. Tell us how many operating divisions
(units of accounting) were considered in doing your impairment
analysis as of October 1, 2004. If 5 operating divisions were
considered, confirm for us that going from five units of
accounting
to four units of accounting would not have changed your assessment
of
impairment. We may have further comment.
General
15. To the extent the comments in this letter are applicable,
please
apply corresponding revisions to the disclosure contained in
Amendment No. 1 to Form S-1 filed on February 7, 2005 (file no.
333-
121561).
* * * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Kathleen Kerrigan at (202) 942-1944 or
Carlos
Pacho at (202) 942-1876 if you have questions regarding comments
on
the financial statements and related matters. Please contact Ted
Yu
at (202) 824-5684 or me at (202) 942-1990 with any other
questions.
Sincerely,
Larry Spirgel
Assistant Director
Cc: Kevin L. Finch, Esq.
Irell & Manella LLP
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Charter Communications, Inc.
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