Cable Operator Near Terms to Accept Chairman's Loan
nytimes.com
By GERALDINE FABRIKANT
Charter Communications, the nation's third-largest cable operator, is close to announcing that it has arranged a mechanism for accepting a $300 million loan from its chairman, Paul G. Allen, according to several industry experts close to the situation.
These people said that Charter was near an agreement with its banks that would let it create a special holding company to borrow the $300 million that Mr. Allen, a co-founder of Microsoft, has said he would make available.
Aryeh Bourkoff, an analyst at UBS Securities, said an agreement would mean that Charter "has moved back from the brink" of bankruptcy and is closer to being able to reduce its debt load by selling assets, cutting costs and refinancing some loans.
A Charter spokesman declined to comment.
Charter remains highly leveraged, with debts amounting to 10 times its annual cash flow, Mr. Bourkoff said. By comparison, Cox Communications, another leading cable company, has debts equal to 3.5 times its cash flow.
Charter, which has a total of 6.6 million subscribers, has said it is also willing to raise cash by selling cable systems with 500,000 subscribers, although it never provided a specific list of assets for sale. It has already sold one system, in Port Orchard, Wash., for $91 million, or $3,600 a subscriber, a relatively high price.
Matthew Harrigan, a cable analyst at Janco Partners, said an agreement on the loan would be good news because it might help the company avoid having to seek bankruptcy protection. "What it really shows is how much cable stocks have rallied and how much the debt markets have loosened up," Mr. Harrigan said.
Shares in Charter Communications rose 40 cents yesterday on Nasdaq, to close at $3.88. |
