Charter needing to obtain additional liquidity to meet cash needs in second half of 2009

By Jennifer Lanning Drey

Portland, Ore., Feb. 27 - Charter Communications, Inc. will need to obtain additional sources of liquidity by early 2009 to meet its projected cash needs later that year, Jeffrey T. "JT" Fisher, Charter's chief financial officer, said during a conference call held Wednesday to discuss the company's fourth-quarter results.

Cash on hand, cash flows from operating activities and amounts available under the company's credit facilities are expected to be adequate to meet Charter's projected cash needs through the second or third quarter of 2009 but thereafter will not be sufficient, Fisher said.

At Dec. 31, Charter had $19.91 billion in long-term debt and $75 million of cash on hand. Availability under the company's revolving credit facility totaled about $1 billion at year-end, none of which was limited by covenant restrictions.

Charter's liquidity needs in 2009 will be impacted in part by maturities of about $300 million, Eloise Schmitz, Charter's senior vice president of treasury and finance, said during the call.

Schmitz also provided more detail on how the company is likely to address the liquidity needs, during the question-and-answer session of the call.

"I think the actions that we will take around the liquidity needs in 2009 will be consistent with what we've done in the past in looking to the market to enhance the liquidity as opposed to changing any of our operating strategies for the business," she said.

Under its current capital structure, Charter has several financing options that it could use to access the market, depending on the state of the credit markets at the time, Schmitz said in response to a question on whether the company's plans would need to change if the markets have not improved by the time the company requires the additional liquidity.

"We've never been opposed to looking at various traditional and nontraditional options that may be presented, so we'll continue to explore all the options and make sure we're keeping an eye on keeping the balance sheet out of distracting any of the operating strategies of the business," she said.

EBITDA, revenue growth

Charter improved its financial results in the fourth quarter, posting pro forma adjusted EBITDA of $563 million, which was a 12.6% increase over the fourth quarter of 2006. Pro forma revenue grew by 10.6% in the fourth quarter, as compared to the same period in the previous year.

"The business has demonstrated growth, and all of our efforts are targeted at maintaining momentum," said Neil Smit, chief executive officer of Charter, during the call.

Charter is a St. Louis-based broadband communications company.

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