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Charter Lenders Balking At Restructuring Plan
Wells Fargo worries plan 'could potentially fall apart...'
Last month Charter Communications rather cheerfully announced they'd be filing Chapter 11 as part of a restructuring that will trim about $8 billion from their $21 billion debt load. The "good news" (to use CEO Neil Smit's words) may not be so good, given the restructuring has annoyed some investors. Charter was sued by lender JPMorgan Chase almost immediately after the restructuring was announced, and now Wells Fargo is also objecting to the company’s reorganization plan, saying Charter’s attempt to reinstate $11.8 billion of debt "may not be feasible."
quote:
...when it filed for bankruptcy, the company had obtained pre-approval from many of its key stakeholders to pursue a reorganization plan that "reinstates" the company's senior bank debt at pre-bankruptcy interest rates, after the company exits from court protection. If the company is unable to reinstate its debt, Wells Fargo said Charter's interest payments will increase by more than $500 million annually, as it will have to reprice its debt at significantly higher interest rates.
Credit default swaps insuring Charter bonds are worth roughly 2.4% of the amount of debt they insure. Charter had previously insisted that the restructuring would not impact customers, but it may not be that easy.
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hayabusa3303
Over 200 mph
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join:2005-06-29
Florence, SC

hayabusa3303

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All i can say is WOW

im really am amazed by how much these cable companies are in debt. Dont get me wrong it takes alot to run a plant and keep it online.

I just amazed at this:interest payments will increase by more than $500 million annually holy smokes.

AMDUSER
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join:2003-05-28
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AMDUSER

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Re: All i can say is WOW

It looks like Charter is in some trouble with the Bankruptcy court..

»uk.reuters.com/article/g ··· 20090424
In a filing with the U.S. Bankruptcy Court for the Southern District of New York on Thursday, the U.S. Trustee said the Charter's disclosure statement is "deficient" and "fails to contain adequate information."

The U.S. Trustee, calling for a change of language in the plan, said Charter did not explain the grounds for releasing its directors, financial advisers, former officers, attorneys, employees and other parties from liability.

TamaraB
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TamaraB to hayabusa3303

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to hayabusa3303
said by hayabusa3303:

im really am amazed by how much these cable companies are in debt. ...
I don't understand. Now, the only Cs I got in college was in Economics, but what ever happened to the notion of using revenue to pay your bills? Why is it that they, and almost every other big company have to amass such enormous debt just to stay afloat? 21 Billion in debt? I'll bet that's more than the company is worth! They must have been borrowing to pay stock holders!

So, if they go belly-up who pays? Well, if the banks to which they own the money to absorb the loss, then it's we the tax payers who will foot the bill -- it comes out of the bank "bailout money".

If that's the case, why not just nationalize them and turn them into the biggest Muni-ISP in the country?

Bob
hottboiinnc4
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join:2003-10-15
Cleveland, OH

hottboiinnc4

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Re: All i can say is WOW

The Gov't would have to BUY each company as it goes out. Like they did AIG. They'd have to buy the shares. Or take it fully over like they did Amtrak. But we see how well Amtrak has worked out.

I could just see what they could do with a nationwide ISP/Cable TV network.

Plus do you want all your information through a proxy to the NSA before it touches the 'net?

KrK
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KrK to TamaraB

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to TamaraB
said by TamaraB:

but what ever happened to the notion of using revenue to pay your bills? Why is it that they, and almost every other big company have to amass such enormous debt just to stay afloat? 21 Billion in debt? I'll bet that's more than the company is worth!
They Borrow money to buy out competitors and smaller operations, and to expand QUICKLY.

There's only 2 ways to expand:

Route 1:

Slowly, steadily, surely. You use revenues reinvested in the company to steadily grow and expand into new areas. This is the old school way of doing things.

Route 2: You borrow money, (or issue stock) to generate a lot of cash and then buy up existing companies and take them over. This allows you to expand your company quickly, but it does amass debt. If you overpay, or you end up having to spend a lot of money later "Integrating" your purchased asset into your company, you may take a bath on the deal. Especially if the takeover and the resulting problems cause you to bleed customers.

So it's a gamble, you can grow fast, and if it works out well, you "Make money fast" and everyone's happy. However blow it, and you're left with an anchor of debt around your neck dragging you down. Welcome to Charter.
rid0617
join:2003-07-20
Greer, SC

rid0617 to hayabusa3303

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to hayabusa3303
You can't help but go in debt when you try to buy each one of the competition

coastjam
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join:2001-03-05
Stamford, CT

coastjam to hayabusa3303

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to hayabusa3303
Anyone who has been with Charter for any length of time has know about their trouble. Where we live, they are the only deal. If their prices go much higher they will have to fold and sell of to another ISP. At a boy Neil thanks again for screwing the North County in SLO.
banner
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join:2003-11-07
Long Beach, CA

banner

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Charter still sponsored race cars last week

I saw the Charter logo on a race car that participated in the Grand Prix in Long Beach last week. (it lost). I had forgotten that the company went bankrupt.

FFH5
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join:2002-03-03
Tavistock NJ

FFH5

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Charter shouldn't look for gov't bailout either

Unlike banks and auto companies, I don't see the Gov't bailing Charter out of its mess either. If the creditors force Charter thru a messy full court case bankruptcy instead of the pre-approved kind, look for Charter to go on the block. And if Comcast wins its case against the FCC in the Appeals Court that limit them to 30% of the cable TV market, you might see Comcast getting a nice chunk of Charter franchises.

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1 edit

AMDUSER

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Re: Charter shouldn't look for gov't bailout either

said by FFH5:

".. If the creditors force Charter thru a messy full court case bankruptcy instead of the pre-approved kind, look for Charter to go on the block. .."
That would not be too surprising, if that happened it may end up at Chapter 7 bankruptcy. Time Warner Cable I'm sure is also intrested in some of Charters systems as well (eg. Long Beach,CA. with about 500,000 customers. )

morbo
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morbo

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Re: Charter shouldn't look for gov't bailout either

the only way to get worse is to have the "cap-happy" Time Warner take over Charter's systems.

hottboiinnc4
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hottboiinnc4

Member

Re: Charter shouldn't look for gov't bailout either

TWC will only take them if Charter has "key" markets. Most of Charter's markets are rural.

Comcast would be interested in some as well.

Would be a great time for ATT to expand cheap and fast.

Hpower
join:2000-06-08
Canyon Country, CA

Hpower

Member

gg

They filled for chapter 11 way too late. Should've done it way sooner. I always seen chater suck a-ss and they will always suck. It will be even worse if time cap warner buys them rofl. Their first plan after they buy them is to SLAM ON SOME CAPS SON!!

Just die already charter. All this reconstructering is BS. And gg @ $500 million interest.
Sammer
join:2005-12-22
Canonsburg, PA

Sammer

Member

Comcast is going after 30% market cap

Comcast really wants to get rid of the 30% market cap and I wonder if Charter's bankruptcy has increased the urgency of that. Of course if Comcast really wanted to strengthen their argument they would give up the terrestrial loophole for good.
SyNiSt3r
join:2007-04-26
Morristown, TN

SyNiSt3r

Member

Charter Bites

The other thing you have to remember about this chapter 11 for charter is that it only removes about 8 billion dollars in debt. They are 21 billion in debt currently.
Even if they get the 8 billion removed they are still 13 billion dollars in debt with interest payments higher than a cats back.
There is no way charter wil ever get out of this debt mess they are in. They are so far behind they might as well just go ahead and start selling off areas and offering them to comcast and others.
XknightHawkX
join:2003-02-13
East Peoria, IL

XknightHawkX

Member

Um where does this debt come from

They have customers that pay for the service. The money they pay should be passed to pay the bill Charter gets. Next part of the money pays the employess. Then stockholder. The money customers pay for service does not go directly to stockholders first.

Maybe it would help if CEO's didn't get multi-million dollar bonus'. Shouldn't even be getting bonus' if they can't get the company to make money. I thought a bonus was what you get for doing a good job. But these big companies seem to think to sign on a CEO and put a bonus into the contract. Shouldn't they just say we're going to pay you this much a year for the job in the contract.

My question is, Is the company bankrupt because of stupidity of the CEO? I'll run a company into the ground for lot less then they get paid to run it into the ground.
zed2608
Premium Member
join:2007-09-30
Cleveland, TN

zed2608

Premium Member

Re: Um where does this debt come from

in charters case it was the previous ceo who ran it into the ground buying a lot of cable companies and stacking up to much debt

charters current ceo has managed to increase there revenue and stuff the only problem for charter is because of the debt they have from past purcheses far outweighs there abilty to handle it
RWOTB
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join:2002-12-04

RWOTB to XknightHawkX

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to XknightHawkX
said by XknightHawkX:

I thought a bonus was what you get for doing a good job
Yeah, that's the old-fashion way of running a business.

CharterMath
@charter.com

CharterMath

Anon

how about that debt

Charter's Debt / Number of Customers
21000000000/5700000

$3,685 per customer

cork1958
Cork
Premium Member
join:2000-02-26

cork1958

Premium Member

Re: how about that debt

said by CharterMath :

Charter's Debt / Number of Customers
21000000000/5700000

$3,685 per customer
Well,
They've made roughly $4320 off me in the 9+ years I HAD been with them, so it's not my fault they're so far in debt!!

I jumped ship a couple months ago when they started implying caps. Also found out after the fact, the I'm getting faster download and upload for $7 a month cheaper through Verizon DSL.