Shares in Charter Communications ( CHTR) rallied Thursday after the cable operator said Wednesday evening that lenders had agreed to a change in its capital structure.

The company, which months ago appeared to be a possible candidate for bankruptcy, says the change paves the way for gaining access to a $300 million backup credit facility promised by controlling shareholder Paul Allen.

"We believe that this event represents a positioning of the capital structure that could afford Charter a greater degree of flexibility," wrote UBS analyst Aryeh Bourkoff in a Thursday morning note.

Charter's shares, which traded as low as 76 cents in March, were up 9 cents Thursday at $3.97.

On Tuesday, Bourkoff upgraded Charter's equity from reduce to neutral and its convertible debt from hold to buy, saying the company was no longer an immediate bankruptcy risk.

"Given recent improvements in operations, prudent cash flow management with recent capital efficiencies, improved valuations, and an overall looser financing environment, we believe that Charter has been able to avert a comprehensive restructuring in the near term, at least until late 2005," wrote Bourkoff.

An unnamed analyst on Bourkoff's team, or a household member, owns shares in the company; such a related party is also an officer, director or advisory board member of the company.

When Adelphia Communications fell into bankruptcy last year amid charges of mismanagement and underreported debt, all of Adelphia's peers got battered, too. But Charter suffered the most. The company said that a federal grand jury was investigating its financial disclosures, and it terminated its chief operating officer and chief financial officer in December.

As Bourkoff indicates, Charter has been on an upswing this year, helped in part by Allen's commitment to the $300 million backup credit facility.