Charter Communications announces $600 million three-tranche deal

By Paul A. Harris

St. Louis, Mo., Jan. 4 - Charter Communications Inc. Friday announced $600 million of new high yield debt in a three-tranche Rule 144A deal via joint bookrunners Salomon Smith Barney, Banc of America Securities and J.P. Morgan.

"There will be two current-pay and one zero in this issuance," Ralph Kelly, treasurer of Charter Communications told Prospect News.

The issuers will be Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp., both subsidiaries of Charter Communications, Inc., according to Kelly.

Although the tranche sizes had yet to be determined at press time, a syndicate official broke down the three tranches as follows:

--an add-on to Charter's 9 5/8% senior notes due Nov. 15, 2009;

--an add-on to its 10% senior notes due May 15, 2011, callable on May 15, 2006 at 105, then at 103.333, 101.667 and par on May 15, 2009; containing an equity claw for 35% at 110 until May 15, 2004; and

--a new issue of senior discount notes due 2012, non-callable for five years and with a five-year zero coupon.

"We will use the proceeds of the offering to reduce outstanding indebtedness on our revolvers," Ralph Kelly, treasurer of the St. Louis, Mo.-based cable and broadband services provider.

Ratings on the new Charter deal are B2 from Moody's Investors Service and B+ from Standard & Poor's, according to the syndicate source who added that a conference call is scheduled at 3:30 pm ET Monday, and a presentation and webcast at 10:30 am ET Tuesday. Pricing is expected midweek.

Ralph Kelly told Prospect News on Friday that the company decided to move on the new bond deal because it perceived a high degree of liquidity in the high yield market.

"Our investment bankers told us there was cash in the marketplace and Charter took the opportunity to give ourselves financial flexibility going forward," he said.

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