Charter Communications, whose debt holders include Apollo Global Management and Oaktree Capital Management, has filed for bankruptcy protection in an effort to unload at least $8 billion in debt.
The US-based broadband and cable provider has reached an agreement with some of its bondholders to secure an investment of more than $3 billion, including $2 billion in equity, $1.2 billion of rollover debt and $267 million in new debt. The company, whose debt load had grown to $21.7 billion by the end of last year as it made new acquisitions, added that it does not intend to seek debtor-in-possession financing.
It was reported last week that primary bondholder Apollo will swap its portion of Charter’s debt for a majority equity stake in the post-bankruptcy company, with Microsoft founder Paul Allen retaining his current 35 percent controlling voting interest. Bondholders Oaktree and Franklin Resources are also getting minority stakes after making similar debt-for-equity swaps, Bloomberg reported.
The negotiated arrangement with three of Charter’s largest bondholders is expected to result in a fairly quick and less expensive restructuring process. The company is seeking an 8 July deadline for creditors to vote on the bankruptcy plan, which must be approved by bondholders by 8 August.
Oaktree is currently targeting $5 billion for its fifth “principal opportunities” fund that will focus on debt-for-control investments. The fund will employ a “loan to own” strategy of purchasing debt in a troubled company at a steep discount and taking control of the company in the bankruptcy process.
The firm recently took control of bankrupt Pierre Foods after buying its debt for $200 million, and is reportedly in talks to take control of UK estate agent Countrywide from Apollo Alternative Assets.
Charter’s deal comes less than two weeks after Canadian door-maker Masonite, in which Kohlberg Kravis Roberts held a $429 million equity stake, filed a similar pre-arranged bankruptcy plan with the support of a majority of its creditors.