Charter bank debt dips slightly on COO, CFO termination news

By Sara Rosenberg

New York, Dec. 23 - Charter Communications Inc.'s bank debt fell off by about a point on Monday in an otherwise very quiet pre-holiday market as the company announced some "house cleaning" news involving management changes, according to a trader.

"The bid backed up and the offer softened but it hasn't traded," the trader said. "It was 84/85 earlier in the day but now it fell away. The bid/offer evaporated."

"It's about a point weaker," the trader added, saying that previously the loan was quoted around 85 bid/86 offer. "But it's hard to gauge because there's nobody around," he concluded.

On Monday, the St. Louis cable company announced that David G. Barford, the executive vice president and chief operating officer, who had been placed on leave, has been fired and will be replaced by Margaret A. Bellville. Furthermore, Kent D. Kalkwarf, the company's executive vice president and chief financial officer, was also fired. Steven A. Schumm, Charter's executive vice president and chief administrative officer has been named interim chief financial officer.

The decision to terminate Barford and Kalwark's employment at Charter was made following a review of various matters, including the grand jury investigation. Members of the board of directors, including the chief executive officer are not targets of the investigation, according to a news release.

In addition to the management changes, Charter also announced that it is proceeding with the re-audit of its 2000 and 2001 financial statements. The re-audits of 2000 and 2001, as well as the audit of 2002 results, are expected to be completed in the first quarter of 2003.

"These actions with respect to the management changes and the re-audit of the company's financials are necessary so that Charter Communications can move forward as we focus on building the company for the future," said Carl Vogel, president and chief executive officer, in a news release. "The re-audits of the Company's 2000 and 2001 financial statements as well as the audit for 2002 will provide a clear picture of Charter Communications financial position. This picture will enhance both our ability and flexibility in moving the company forward, particularly with respect to our balance sheet."

And last on Charter's list of news was the current anticipation that the growth rate of fourth quarter revenue will be at or near the low end of its prior revenue guidance of 8% to 9% and fourth quarter operating cash flow will be less than previous guidance.

In follow-up news, Hollinger International Inc. closed on its amended $310 million senior secured credit facility. Wachovia Securities was the lead arranger and bookrunner on the deal.

The facility consists of a $45 million revolver due Sept. 30, 2008 with an interest rate of Libor plus 325 basis points, a $45 million amortizing term loan A due Sept. 30, 2008 with an interest rate of Libor plus 325 basis points and a $220 million amortizing term loan B due Sept. 30, 2009 with an interest rate of Libor plus 350 basis points.

Proceeds from the term loans, combined with proceeds form a notes offering and available cash on hand, will be used to redeem existing notes, to repay all amounts owed by Hollinger under its loan agreement with Trilon International Inc., to retire the equity forward purchase agreements between Hollinger and certain Canadian chartered banks and for general corporate purposes.

The Chicago, Ill. publishing company's revolver will be undrawn at close.

"We are very pleased to have completed our previously announced comprehensive financing initiative, which has significantly simplified the company's capital structure," said Conrad Black, chairman, in a news release. "Under our new financing arrangements, we have achieved several important benefits for Hollinger International Inc., including extending the average maturity of the company's indebtedness, reducing the company's effective borrowing rate, and obtaining more advantageous borrowing terms."

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