Charter Stock Tumbles

Nov 16, 2004  •  Post A Comment

Shares in Charter Communications tumbled as much as 16 percent Tuesday as Wall Street reacted to the cable operator’s plans to issue $750 million in convertible debt to pay down debt due next October.

Charter’s stock sank 43 cents to $2.28 a share in midday trading as equity holders learned their stake in the debt-laden company was about to be diluted by the convertible offering, which allows buyers of the debt offering to convert their holdings into equity shares.

The offering enables Charter to pay down $588 million in convertible bonds set to mature in October 2005 and addresses Charter’s earlier warning that it did not have the funds internally to pay off that debt.

But despite averting a liquidity crisis next October, some analysts remain concerned that the company continues to wilt under a heavy debt load and weak subscriber growth. Further, some analysts said it remains unlikely that Charter’s majority shareholder, billionaire and Microsoft co-founder Paul Allen, will step in with a cash infusion-at least not in the near term.