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Mail Stop 0407
June 10, 2005
Paul E. Martin
Charter Communications, Inc.
12405 Powerscourt Drive
St. Louis, Missouri 63131
Re: Charter Communications, Inc.
Amendment No. 3 to Form S-1
File No. 333-121136
Filed June 8, 2005
Dear Mr. Martin:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document 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 note that the page numbers mentioned in our
comments refer to those used in the marked courtesy copies of the
amended registration statement.
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 filing.
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.
* * * * *
1. Please provide us with the following written representations
from
Charter, Citigroup, and their counsel, as applicable:
* the contemplated offering is a bona fide distribution by Charter
of
its Class A common stock into the open market;
* Citigroup will not enter into any arrangements or
understandings,
directly or indirectly, with the purchasers of Class A common
shares
in connection with its sales efforts regarding the return, loan,
or
other similar use of the Class A common shares; and
* the offering will commence immediately after the date of
effectiveness and is not a continuous offering.
2. In your response letter, please tell us the approximate
percentage
or number of 5.875% noteholders who currently have open short
positions.
3. In your response letter, please provide us with the following
information regarding the contemplated offering procedures:
* identify the nature of purchasers to whom Citigroup intends to
offer the registered Class A common shares, particularly given
that
persons with open short positions are now prohibited from
purchasing
the Class A common shares in the offering, and provide the names
of
all currently contemplated offerees;
* explain in greater detail how Citigroup intends to locate or
identify purchasers interested in buying shares not for the
purpose
of closing out short positions or facilitating the closing of
another
person`s short positions (e.g., describe the sales methods that
Citigroup will use to market the shares);
* explain when Citigroup expects to determine the total number of
shares that will actually be sold (e.g., indicate whether
Citigroup
will make this determination prior to effectiveness or after
effectiveness);
* describe in greater detail when Citigroup will compile the
"Holder
List" and ask each holder on the list if they have open short
positions, as indicated in the response letter;
* describe in greater detail when during the offering period
Citigroup will make the inquiries with its prime brokerage and
share
lending desks regarding the "Holder List," as indicated in the
response letter (also indicate the frequency with which Citigroup
will make such inquiries); and
* describe Charter`s and Citigroup`s intentions with respect to
the
offering if the borrowed Class A common shares cannot be sold at
the
contemplated fixed offering price (e.g., clarify whether Citigroup
intends to return the borrowed but unsold shares to Charter; under
the share lending agreement, such returned shares presumably
cannot
be borrowed again for future sales).
4. Please provide a detailed analysis of the applicability of and
compliance with Regulation SHO with respect to: (a) Citigroup`s
sale
of the 150 million borrowed shares of Charter`s Class A common
stock,
and (b) CGML and its affiliates` short sale transactions of such
Class A common stock (which, according to the first paragraph in
the
Underwriting section, will be executed to facilitate transactions
by
which investors in the 5.875% notes will hedge their investments
in
such notes). Please include in the analysis a detailed
description
of compliance with the locate and delivery requirements of Rule
203,
as well as the marking requirements of Rule 200(g).
5. The Share Lending Agreement section indicates that the borrowed
shares will not be considered outstanding for the purpose of
computing and reporting the earnings per share. However, please
describe the numeric impact on the number of total outstanding
shares
with respect to the equity investors purchasing Charter`s Class A
common stock from Citigroup, as well as the potential impact on
the
number of total outstanding shares with respect to any secondary
market sales of Charter`s Class A common stock that could be made
by
such equity investors.
Outside Front Cover Page
6. We note your statement that Citigroup will borrow and sell the
Class A common shares "only to the extent that there is interest
by
investors in the 5.875% convertible senior notes in establishing
hedge positions and there is corresponding demand by purchasers
for
the shares." In your response letter, please explain how this
statement is consistent with your intention to conduct a fixed-
price,
best-efforts offering that will commence immediately and is not a
continuous offering. Please disclose clearly on the cover page
and
in the Underwriting section that the offering is a fixed-price,
best-
efforts offering that will commence immediately after
effectiveness
and is not a continuous offering.
7. Please state clearly that the offering is being underwritten on
a
best-efforts basis. As required by Item 501(b)(8)(iii) of
Regulation
S-K, please state the date that the offering will terminate.
Notice to Investors, page ii
8. Please refer to the first paragraph. Revise so that the shares
are not being offered to any person who has an open short position
in
Charter`s Class A common stock at the time of offer or sale of the
shares, rather than at the "time of confirmation." Also note our
comment 16 below. Please revise the other sections of the
prospectus
and the Form of Investor Acknowledgment accordingly.
Use of Proceeds, page 27
9. Please disclose how the offering`s proceeds will be used to
facilitate the establishment of hedges by the 5.875% noteholders,
as
described on the cover page and page 173.
Share Lending Agreement, page 172
10. Please refer to the last paragraph on page 173 ("We have been
advised..."). We note that you state the Class A common shares
are
being offered to "facilitate the establishment by holders of
[your]
5.875% convertible senior notes of hedged positions with respect
to
the 5.875% convertible senior notes." In your response letter,
please clarify how this statement is consistent with the statement
in
the preceding paragraph (and elsewhere in the prospectus) that
"many
investors in the notes have been able to borrow shares of [your]
Class A common stock for the purpose of shorting such stock to
hedge
their investments in the notes."
Your response letter should also clarify why, in light of the
apparent ability of many 5.875% noteholders to establish hedges
independently, Charter and Citigroup still feel that they must
"facilitate" the establishment of hedges by these noteholders.
For
example, state whether the offered shares will be used only to
facilitate the hedges by those noteholders who did not create pre-
effective hedges. Indicate whether Charter and Citigroup intend
to
take any action in connection with the offering to "facilitate"
the
maintenance of the pre-effective hedges by 5.875% noteholders or
transfer any economic benefits of the offering (including through
synthetic means) to 5.875% noteholders who created pre-effective
hedges. In this regard, we note your statement on page 26 that
the
offering may result in the "replacement of existing hedged
position
by those holders who are already hedged."
Please revise the filing accordingly.
11. Please revise the disclosure to clarify further the source of
the
Class A common shares that will be used for the "loans of shares"
to
the 5.875% noteholders.
Underwriting, page 175
12. We note that "if all of the shares are not sold at the initial
offering price, the underwriter may change the public offering
price..." Please delete this statement and confirm in your
response
letter that the shares will be sold at a fixed price for the
duration
of the offering.
13. Please provide more detailed and useful disclosure explaining
how
Citigroup and Charter intend to determine the fixed offering
price.
For example, state whether the price is expected to be at a
discount
from the prevailing market price of the Class A common stock.
Provide clear and concrete disclosure regarding the factors that
will
be considered in determining the offering price. Indicate when
during the offering process Citigroup and Charter intend to
determine
the offering price.
14. Please refer to page 176. We note that the purchasers may
send
an email to Citigroup in lieu of returning the Form of Investor
Acknowledgement. Please delete this option; purchasers must
execute
and deliver the actual Form of Investor Acknowledgement to
Citigroup.
However, we do not object to the return of the executed Form of
Investor Acknowledgement through electronic means, including
emails.
Annex A, page A-1
15. In your response letter, please describe Charter`s and
Citigroup`s understanding of the definition of an "open short
position" for purposes of the written representations. For
example,
state whether the term includes synthetic short positions.
16. Currently, the written representations cover only persons who
have open short positions at "the time of confirmation." Given
that
prospective purchasers of the Class A common shares can close out
their open short positions immediately prior to the purchase of
the
offered shares and reopen short positions immediately thereafter,
please revise the written representations so they apply to open
short
positions created during a period of suitable duration both prior
to
the offer of Class A common shares and after the sale of such
shares.
17. Please refer to the second bullet-pointed sentence ("it is not
purchasing the shares..."). We note that this part of the written
representation applies only to arrangement or understanding to
"resell" the shares to any person with an open short position at
the
time of confirmation. As we previously stated, the registered
shares
should not be sold or used in any manner that would facilitate the
closing of short positions created prior to the effectiveness of
the
registration statement. Accordingly, please revise the written
representation so that it prohibits any arrangement or
understanding
to lend the shares, directly or indirectly, to persons with open
short positions at the time of confirmation.
In addition, please revise the written representation to prohibit
any
arrangement or understanding for the return or loan of the
registered
Class A common shares by the purchasers to Citigroup, as
contemplated
in Alternative Two of the chart provided in your March 10, 2005
letter, so that it can facilitate the closing of open short
positions
held by Prohibited Persons at the time of confirmation.
Please revise the disclosure in the registration statement to
conform
with the revisions to the written representation.
* * * * *
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 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) 551-3369 or
Carlos
Pacho at (202) 551-3835 if you have questions regarding comments
on
the financial statements and related matters. Please contact Ted
Yu
at (202) 551-3372 or me at (202) 551-3810 with any other
questions.
Sincerely,
Larry Spirgel
Assistant Director
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Paul E. Martin
Charter Communications, Inc.
June 10, 2005
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