Fitch puts Charter on watch

Fitch Ratings said it placed the CCC issuer default ratings of Charter Communications, Inc. and its subsidiaries on Rating Watch negative.

Also placed on watch were Charter's CCC/RR4 convertible senior notes; the CCC/RR4 senior unsecured notes of Charter Communications Holdings, LLC, CCH I Holdings, LLC, CCH I, LLC, CCH II, LLC and CCO Holdings, LLC; CCO Holdings' B/RR1 third-lien term loan and Charter Communications Operating, LLC's B/RR1 senior secured credit facility and senior secured second-lien notes.

The Rating Watch reflects Fitch's concern that Charter will not have access to sufficient liquidity to fund its business and address $237 million of non-bank maturities in 2009.

The agency expects Charter will continue to generate negative free cash flow throughout the ratings horizon and that proceeds from the company's revolver, along with existing cash and cash flow generated from operations, will only provide enough funding to operate into 2009. In Fitch's opinion, Charter's access to additional liquidity beyond the revolver is uncertain given current capital market conditions.

In addition to liquidity concerns, Charter has $2.3 billion of scheduled maturities in 2010, including $2.2 billion at CCH II, presenting additional refinancing risk. The agency said that as of the end of 2007, $9.9 billion of Charter's $19.9 billion of debt was senior to the debt outstanding at CCH II and that leverage at CCH II was 5.34 times.

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