GILROY
Struggling Charter Communications Inc., the nation’s fourth-largest cable operator and Hollister’s cable provider, said last week that it plans to file a prearranged Chapter 11 bankruptcy by April 1.
But “operations will continue as usual” for Charter’s 5.5 million customers, said Taylor Ingraham, a spokesperson for Charter Communications.
Charter, which is controlled by Microsoft Corp. co-founder Paul Allen, said it has reached an agreement in principle with holders of $8 billion in debt who will give up repayment of their debt. In return, they will receive common shares, or warrants for rights to get common shares that translate to nearly owning the entire company after bankruptcy.
Allen will remain as an investor and retain the largest voting interest in the St. Louis-based company. While his 51 percent stake in Charter will be wiped out, along with those of other shareholders as the stock is canceled, Allen was given voting control by debt holders. Allen also holds some debt, which will be converted, and preferred stock.
In a prearranged bankruptcy, a company enters into reorganization with a plan to emerge that has the approval of major stakeholders. The rest of the creditors will be dealt with in court. In a prepackaged bankruptcy, each creditor has voted on the plan before the filing.
Charter said it plans to pay what it owes to suppliers and other trade creditors in full and go about the normal course of business.
“We are pleased to have reached an agreement with such a significant portion of our bondholders on a long-term solution to improve our capital structure,” said Neil Smit, president and chief executive officer, in a statement.
The Associated Press contributed reporting to this report.
