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Charter Communications (CHTR) - Get Charter Communications, Inc. Class A Report slipped 11% Monday after rolling out a plan to refinance some of its convertible debt.

The St. Louis-based cable operator -- the nation's fourth-largest operator of cable TV systems -- said it would undertake a private placement of $750 million of convertible senior notes due 2009.

Proceeds from those notes, said Charter, would be used to redeem $588 million outstanding 5.75% convertible senior notes due October 2005.

As part of the transaction, Charter said it expected to register up to 150 million shares of its Class A Common Stock, with the intention of lending it to a financial institution for sale in a public offering. "Charter expects to agree to conduct the offering in order to facilitate the trading of its senior convertible notes outstanding at the time of such offering," the company said.

Charter, controlled by


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billionaire Paul Allen, has been struggling in recent years with a heavy debt load, increased competition from satellite TV operators and investigations of the conduct of former officers of the company.

Charter's shares, which rose 3 cents Monday to $2.71, dropped 34 cents in after-hours trading following the announcement of the expected financial transactions.

The maturity of the October 2005 convertibles had loomed as the next big financial hurdle for Charter to clear, followed by another convertible redemption in 2006.

Monday's deal "gives them some breathing room," says Oppenheimer analyst Tom Eagan, who initiated coverage on Charter with a neutral rating last week.

Charter will now be able to use the $957 million available in a credit facility to fund operations, says Eagan, rather than to pay off the converts. "They're not going to be strapped in '05," Eagan says. The deal, he says, will take management's focus "away from meeting this near-term important deadline and more toward the operation of the company."

In 2006, notes Eagan, Charter has $186 million in additional convertibles and debt coming due. "'06 is not as problematic now," Eagan says. "They probably have cash flow from operations to pay those in '06."

With the after-hours stock decline likely a reaction to the 150 million new shares being issued, Eagan says, "The reduced risk of the company offsets any increase in the number of shares."

That being said, Eagan says he's maintaining his neutral rating on the stock.