NEW YORK Feb 11 Moody's Investors Service on
Wednesday cut its ratings on Charter Communications Inc
(CHTR.O) to an even more speculative grade, citing an
expectation that the company faces an imminent bankruptcy.
Moody's cut Charter's corporate family rating two notches
to "Caa3," nine steps below investment grade.
The downgrade reflects the increased likelihood of default
as the grace periods for missed interest payments totaling
approximately $74 million on several of Charter's subsidiaries'
debt are set to expire on February 15, 2009, Moody's said in a
Charter, the U.S. cable operator controlled by Microsoft
Corp (MSFT.O) co-founder Paul Allen, has hired a turnaround
expert as the deadline to meet the interest payment looms,
according to a person familiar with the company. For details,
"Even if the interest payments are made prior to expiration
of the grace period, Moody's anticipates Charter will likely
have to file a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code," Moody's said.
The company's outlook is stable, however, indicating
Moody's estimate that bondholders may recover around 65 percent
of the debt's worth, on average, in a restructuring.
Charter failed to make the interest payment in January even
though it had more than $900 million in cash available to pay
operating costs and expenses.
"The recent revolver draw-down which left the company with
more than $900 million of cash balances as reported in January
will effectively preclude the need for a separate
Debtor-In-Possession loan, the financing of which may have been
difficult to come by given ongoing tightness in the credit
markets," Moody's said.
(Reporting by Karen Brettell;Editing by Diane Craft)