Posted by madcityradio.com on December 14, 2008 at 23:37:47:
Moody's downgrades Charter, says bankruptcy likely in 2009
Staff/news services — 12/13/2008 2:53 pm
Moody's Investors Service lowered its credit rating on Charter Communications Inc. by two notches Friday after the company said it will hold discussions with bondholders in order to shore up its finances.
The ratings agency said it believes a default is imminent and bankruptcy is likely for Charter in 2009. Any bankruptcy almost certainly would be reorganizational, rather than a liquidation, which means customers wouldn't necessarily see an immediate change in service.
St. Louis-based Charter, which is the dominant subscription TV provider in the Madison area, is struggling with a debt load of more than $20 billion. It warned earlier this year it may need to file for bankruptcy protection if it failed to raise additional funds to finance its cash needs by 2010.
"We believe engaging in discussions with our bondholders, aimed at improving our capital structure and enhancing our financial flexibility, is in the company's and our customers' best interests," Charter CEO Neil Smit said in a news release.
Moody's cut its rating on Charter to "Ca" from "Caa2." Both are non-investment grade ratings.
"Charter's ratings have long reflected a high probability of default and a fundamental mismatch between the company's liability structure and its business model," Russell Solomon, Moody's senior vice president, said in a statement.
Charter, which is controlled by Microsoft Corp. co-founder Paul Allen, reported interest costs of $478 million for the third quarter compared with operating income of $208 million.
It is the fourth largest cable company in the U.S. after Comcast Corp., Time Warner Cable Inc. and Cox Communications.
Charter's shares closed down 2 cents on Friday to 13 cents.
(The Capital Times)