A bankruptcy judge has approved Charter Communications Inc.’s (CHTRQ.PK) reorganization plan, paving the way for the company, the fourth-largest cable operator in the United States, to emerge from Chapter 11 by the end of the year.
There will be several changes. First, Charter’s debt will drop by about $8 billion; it still will have $13 billion to pay off. Microsoft Corp. co-founder Paul Allen’s majority holdings in the company will fall to a 2 percent stake, although he will have a 35 percent voting interest in the new corporation and be allowed to name four directors. Allen this week was diagnosed with lymphoma.
Meanwhile, the bondholders who swapped their $8 billion in debt will own almost all of the new Charter.
Charter filed for bankruptcy in March. It buckled under a $21.7 billion debt load and was unable to refinance the borrowings. The company went public in 1999 and has never reported a profit, thanks to high interest payments. However, Charter CEO Neil Smit told The Associated Press on Tuesday he expects that to change. Charter should post positive cash flow as soon as it emerges from bankruptcy, he told the wire service.
“That was one of our objectives — a healthy company that is cash-flow positive,” Smit said, according to The AP.
Smit also told The AP Charter will speed up its Internet access and add more video-on-demand content.
Charter is based in Missouri. It serves 4.9 million customers in 27 states.