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Charter Claws Back

12/20/2009 2:00 AM Eastern

Charter Communications continued to claw its way out of the shadow of its bankruptcy filing, naming a tenth member to its board of directors last week and unveiling some details on a planned issuance of stock slated for 2010.

Charter, which emerged from Chapter 11 bankruptcy protection on Nov. 30, named financial veteran David Merritt to its board last Tuesday. Merritt, who had been on Charter's board since 2003, is the tenth board member of the emerged company (one short of the 11 board seats the company expects to fill). Merritt, currently managing director of BC Partners, a financial advisory firm, will also serve on the board's Audit Committee.

“Dave's financial expertise, discipline and leadership skills complement the broad range of experience possessed by our other Board members,” Charter CEO and board member Neil Smit said in a statement.

Charter also released some preliminary information regarding its new stock. Charter expects to begin trading on the NASDAQ global market exchange no sooner than Jan. 14 — 45 days after it emerged from Chapter 11 bankruptcy protection. In the SEC filing, Charter said it plans to issue about 111.99 million shares of common stock (109.7 million Class-A shares and 2.2 million Class-B shares); 5.5 million shares of payment-in-kind preferred stock; 4.7 million warrants to purchase Class-A stock (exercisable at $19.80 per share) to former chairman Paul Allen; 6.4 million warrants to purchase common stock for certain bond holders (exercisable at $46.86 per share) and 1.3 million warrants to purchase common stock for other noteholders (exercisable at $51.28 per share).

Charter has not yet determined at what price its new shares would be valued, but in an earlier filing had priced stock to be issued through an employee stock ownership plan at $19.37 per share. That, however, could be too low. Charter has been trading on a when-issued basis — often a gauge to the ultimate trading price — since Dec. 2, ranging in value from $33 per share to $39.75 per share.

When-issued shares can be bought or sold like ordinary securities, except that transactions do not settle until the stock is formally issued. The attraction: Trading in when-issued shares usually requires a small down payment of about 25% of the value of the shares, and no margin or loan debt is needed for the balance until the settlement date, which can be weeks in the future.

CHARTER CH-CHING
Charter stock began trading when-issued on Dec. 2. Below are the closing prices:

SOURCE: NASDAQ
12/2 $33
12/3 $36
12/4 $36.25
12/7 $36.25
12/8 $36.50
12/9 $36
12/10 $35.75
12/11 $35.50
12/14 $36
12/15 $35
12/16 $35.25

 

 

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