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S&P puts Charter on negative watch, rates notes CCC-
Standard & Poor's said it placed Charter Communications Inc.'s CCC+ long-term corporate credit rating and CCC- senior convertible notes due 2009 on CreditWatch with negative implications.
The agency also placed on CreditWatch negative the CCC+ corporate credit rating of Charter subsidiary Charter Communications Holdings LLC and the CCC- rating on $1.66 billion of the subsidiary's senior notes with maturities ranging from 2009 to 2012.
The CreditWatch placement follows Charter's announcement of two exchange offers. First, Charter is offering to exchange up to $450 million of its $862.5 million outstanding 5.875% convertible notes due 2009 for up to $188 million in cash, up to 45 million shares of Charter common stock and up to $146.25 million of new notes to be issued by Charter subsidiaries.
The $146.25 million of 10 ¼% notes to be co-issued by subsidiaries CCH II LLC and CCH II Capital Corp. were assigned a CCC- rating, which is not on CreditWatch.
Second, CCH II and CCH I began private offers to issue up to $875 million of new senior notes with maturities of 2013 and 2015 in exchange for Charter Communications Holdings' notes with maturities ranging from 2009 to 2012.
The CreditWatch action reflects S&P's view that completion of the exchange offers would be tantamount to a default on the notes' original terms. In both cases, bondholders exchange for longer-dated maturities, and, in the case of the convertible notes, holders also receive equity as part of the exchange. Upon completion of the exchange offers, the agency plans to lower the corporate credit ratings to SD to indicate a selective default and the convertibles notes to D.
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