Charter Comm (CHTR) Bull Turns Negative, As Massive Debt Strangles The Company
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One of the few Charter Communications Inc. (Nasdaq: CHTR) bulls is turning as the company looks headed for bankruptcy. Analysts at Pali Research downgraded the stock today from Buy to Neutral, citing the massive debt load.
The firm said, while growth has remained at the top end of the cable industry, the weight of its $21 bn of debt (9.1x leverage) is becoming too much for the company to bear.
Pali notes CHTR has no meaningful maturities before late 2010, which would normally have put CHTR in a relatively stable financial situation (assuming debt markets begin to recover in the next 18 months). However, the company’s ability to distribute cash between various levels of its capital structure (which
is needed to make interest payments) has become increasingly challenged.
Pali said with the risk of bankruptcy rising and CHTR's pursuit of a massive debt for equity swap that would likely leave insignificant value for current equity holders they are now downgrading the stock.
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