(AP) – Charter Communications Inc. said Tuesday a bankruptcy judge has confirmed its reorganization plan, clearing the way for the nation's fourth-largest cable TV operator to emerge from Chapter 11 in a few weeks.
Charter said the plan reduces its debt burden by about $8 billion, leaving $13 billion. Bondholders who agreed to swap their $8 billion of debt will end up owning nearly all of the post-bankruptcy company.
Microsoft Corp. co-founder Paul Allen's majority holdings in Charter will be reduced to a 2 percent stake in the new company. But he will get a 35 percent voting interest in the reorganized company and will also appoint four directors to the board.
A debt burden of $21.7 billion and a tight credit environment drove Charter to file for bankruptcy protection in March.
The company hasn't turned a profit since it went public in 1999 due to high interest payments.
But Neil Smit, Charter's chief executive, told The Associated Press that the company expects to post positive cash flow immediately after emerging from bankruptcy.
"That was one of our objectives – a healthy company that is cash-flow positive," he said.
"We'll continue to stay focused on simple, consumer-oriented choices," such as proving faster Internet speeds and adding more content to video-on-demand, he added.
Charter orchestrated a pre-arranged bankruptcy, in which the company and major bond holders reach an agreement of terms before filing for Chapter 11.
Under the plan, Charter gets $1.6 billion from an equity rights offering and swaps $1.7 billion in notes for new debt carrying an interest rate of 13.5 percent that matures in 2016. Charter said yearly interest expenses will fall by more than $830 million. The company racked up debt from a string of acquisitions.
The Chapter 11 case was filed in the Southern District of New York.
The cable operator, based in St. Louis, Mo., serves 4.9 million subscribers in 27 states.