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.

Charter serves eight Nebraska cities as well as outlying areas of Omaha and Lincoln.

The filing restructures about $8 billion of debt at St. Louis-based 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.

Charter filed a prearranged bankruptcy, which has the agreement of 52 percent of bond holders. The rest of the debtors will be dealt with through bankruptcy court. The cable operator racked up massive amounts of debt as it grew through acquiring cable systems.

For years the company has ducked insolvency, but it is now coming up against tight credit and billions of dollars of debt coming due.

While the bankruptcy does provide relief, it remains to be seen whether Charter can finally post net profit with a smaller debt load during a recession.