Moody's assigns junk rating to Charter holding co.

AP News
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Posted: Nov 30, 2009 6:28 PM

Moody's Investors Service said Monday it has assigned a "Ba3" corporate family rating to Charter Communications Inc.'s holding company, CCH II LLC, following the company's emergence from Chapter 11 bankruptcy protection.

A "Ba3" rating is non-investment grade, also referred to as "junk."

Charter is the nation's fourth-largest cable operator. The company, controlled by Microsoft co-founder Paul Allen, said Monday the prearranged bankruptcy filing erased $8 billion of debt and the new company will be left with borrowings of $13 billion. Bondholders who exchanged $8 billion of debt end up owning substantially all of the newly reorganized company.

Allen's majority stake will be reduced to 2 percent, but he will have 35 percent control of all votes, the largest voting interest in the company.

Moody's also assigned a "Ba3" probability of default rating to Charter. The rating outlook is stable.

"The ratings broadly reflect a still high (albeit more moderate) level of financial risk and a steadily increasing level of operational risk given the heightened competitive environment," the ratings agency said.