Charter Files For Prearranged Bankruptcy

DEBORAH YAO

Charter Communications Inc. on Friday filed for a prearranged Chapter 11 bankruptcy to get relief from its creditors, as the nation's fourth-largest cable operator strives to keep its head above water and still compete with phone companies and satellite TV providers.

The St. Louis-based company seeks to emerge from bankruptcy as early as the end of summer and doesn't plan on selling any of its assets to competitors. After Chapter 11, interest costs at Charter, which has never posted a profit since going public in 1999 due to massive debt interest payments, will be cut in half to $830 million a year.

The filing restructures about $8 billion of debt at Charter, which is controlled by Microsoft Corp. co-founder Paul Allen, but leaves about $13 billion of debt on its books. Allen will control 35 percent of the votes in the reorganized company.

In the bankruptcy, Allen's 51 percent equity stake in the cable operator will be wiped out, along with shares of other stockholders. Allen also holds some debt and preferred stock.

Charter filed a prearranged bankruptcy, which has the agreement of major bond holders. The rest of the debtors will be dealt with through bankruptcy court.