SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 2004
Charter Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation or Organization)
000-27927 43-1857213
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(Commission File Number) (I.R.S. Employer Identification Number)
12405 Powerscourt Drive
St. Louis, Missouri 63131
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(Address of principal executive offices including zip code)
(314) 965-0555
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 22, 2004, Charter Communications, Inc. issued and sold $862.5
million original principal amount of Convertible Senior Notes due 2009. The
notes were sold in a private transaction under Rule 144A of the Securities Act
of 1933. The notes have an annual interest rate of 5.875%, payable
semi-annually, and will be convertible at any time until their maturity date. In
connection therewith, Charter entered into a series of agreements filed herewith
and incorporated by reference herein.
The initial conversion rate, subject to adjustment in certain circumstances,
will be 413.2231 shares of Charter's Class A common stock per $1,000 original
principal amount of notes, which represents a conversion price of approximately
$2.42 per share. Upon conversion, Charter will have the right to deliver in lieu
of shares of its Class A common stock, cash or a combination of cash and Class A
common stock. Any holder that converts its notes prior to the third anniversary
of the issue date will be entitled to receive, in addition to the requisite
number of shares upon conversion, an interest "make whole" payment equal to the
cash proceeds from the sale by the trustee of that portion of the remaining
pledged U.S. government securities which secure interest payments on the notes
so converted, subject to certain limitations with respect to notes that have not
been sold pursuant to an effective registration statement under the Securities
Act of 1933.
Upon a change of control and certain other fundamental changes, subject to
certain conditions and restrictions, Charter may be required to repurchase the
notes, in whole or in part, at 100% of their principal amount plus accrued
interest at the repurchase date. In addition, if certain transactions
constituting a change of control occur on or prior to the maturity date, under
certain circumstances, Charter will increase the conversion rate by a number of
shares determined on the dates of such transaction and the price per share of
common stock in such transaction. Notwithstanding the provisions described
above, prior to November 16, 2008, no holder of the notes will be entitled to
receive shares of Charter's Class A common stock upon conversion of notes to the
extent that such receipt would cause such noteholder to become, directly or
indirectly, a beneficial owner of more 4.9% of the shares of Class A common
stock outstanding at the time and 9.9% for any conversion after that date.
Pursuant to the Resale Registration Rights Agreement, Charter agreed to file,
within 30 calendar days of the notes sale, a shelf registration statement with
the Securities and Exchange Commission (SEC) covering resales of the new notes
and the Class A common stock issuable upon conversion of the notes. Pursuant to
the Share Lending Agreement and the Borrowed Share Registration Rights
Agreement, Charter has also agreed to loan up to 150,000,000 of its Class A
common stock to an affiliate of Citigroup Global Markets Inc. and to file,
within 18 calendar days after the notes sale, a registration statement with the
SEC covering the loaned shares that can be used by Citigroup Global Markets Inc.
to sell the borrowed shares. Charter will pay liquidated damages if it fails to
file either registration statement by the required deadline or if either
registration statement is not declared effective by the SEC by the required
deadline.
After the earlier of the sale of any notes pursuant to an effective registration
statement or 2 years after the issue date of the notes, Charter may redeem the
notes in whole or in part for cash for 100% of the accreted principal amount
plus any accrued and unpaid interest, deferred interest and liquidated damages,
if any, on the notes up to but not including the redemption date, if the closing
price of its Class A common stock has exceeded 180% of the conversion price in
any consecutive 30 trading day period, if such 30-day trading period is prior to
November 16, 2007 or 150% if such 30-day period begins thereafter.
As agreed in the Indenture, Charter (1) used a portion of the net proceeds from
the sale of the notes to purchase a portfolio of U.S. Treasury securities as
security for the first six scheduled interest payments on the new notes and for
the prepayment of such interest upon any conversion of the new notes prior to
November 16, 2007 and (2) will use a portion of the net proceeds to redeem its
$588 million outstanding 5.75% Convertible Senior Notes due October 2005. Excess
proceeds will be used for general corporate purposes.
In addition, in connection with the issuance of the new notes, Charter entered
into certain agreements with its direct subsidiary, Charter Communications
Holding Company, LLC (Holdco Sub) to provide for the issuance of "mirror"
securities of Holdco Sub to Charter. These agreements were entered into in order
to facilitate compliance with the
certificate of incorporation of Charter and the governing documents of Holdco
Sub regarding ownership of assets by Charter and the required issuance of mirror
securities by Holdco Sub. They provide for the issuance by Holdco Sub to Charter
of mirror notes, the terms of which mirror the terms of the new notes, and a
loan of Holdco Sub units that will mirror the terms of the shares loaned under
the Share Lending Agreement. Charter also entered into a letter agreement with
the other members of Holdco Sub under which, among other things, the parties
agreed that the Holdco Sub units to be issued as mirror securities with respect
to the shares to be loaned under the Share Lending Agreement as described above,
will, for purposes of the allocation provisions of the Limited Liability Company
Agreement of Holdco Sub, be treated as disregarded and not outstanding until
such time (and except to the extent) that, under the Share Lending Agreement,
Charter treats the loaned shares in a manner that assumes they will neither be
returned to Charter by the borrower nor otherwise be acquired by Charter in lieu
of such a return.
On November 23, 2004, Charter called for redemption $588 million total principal
amount of its 5.75% Convertible Senior Notes due 2005, representing all of such
Notes outstanding, at 101.15% of principal amount, plus accrued and unpaid
interest to the date of redemption, December 23, 2004.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information in Item 1.01 of this Form 8-K is hereby incorporated by
reference to this Item 2.03.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
The information in Item 1.01 of this Form 8-K is hereby incorporated by
reference to this Item 3.02. As described in Item 1.01, the newly issued notes
are convertible into shares of Charter's Class A common stock at an initial
conversion rate, subject to adjustment in certain circumstances, of 413.2231
shares of Charter's Class A common stock per $1,000 original principal amount of
notes, or a total of 356,404,923.75 shares. In addition, the initial purchasers
of the notes received a fee of 3.5% of the total principal amount of the notes
issued.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are filed pursuant to Item 1.01:
Exhibit
Number Description
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10.1 Indenture dated as of November 22, 2004 between Charter Communications,
Inc. and Wells Fargo Bank, N.A. as Trustee governing 5.875% Convertible
Senior Notes due 2009.
10.2 Charter Communications, Inc. 5.875% Convertible Senior Notes due 2009
Resale Registration Rights Agreement dated November 22, 2004.
10.3 Charter Communications, Inc. Share Loan Registration Rights Agreement
between Charter Communications, Inc. and Citigroup Global Markets, Inc.
dated November 22, 2004.
10.4 Collateral Pledge and Security Agreement dated as of November 22, 2004
between Charter Communications, Inc., as Pledgor and Wells Fargo Bank,
N.A. as Trustee and Collateral Agent.
10.5 Collateral Pledge and Security Agreement dated as of November 22, 2004
between Charter Communications Holding Company, LLC, as Pledgor, Charter
Communications, Inc., as Pledgee and Wells Fargo Bank, N.A. as Trustee
and Collateral Agent.
10.6 Share Lending Agreement dated as of November 22, 2004 between Charter
Communications, Inc., as Lender and Citigroup Global Markets Limited as
Borrower through Citigroup Global Markets Inc. as Agent for Borrower and
Citigroup Global Markets Holdings Inc. as guarantor of Borrower's
obligations and Citigroup Global Markets Inc. in its capacity as
Collateral Agent.
10.7 Charter Communications Holding Company, LLC Mirror Notes Agreement dated
November 22, 2004.
10.8 Unit Lending Agreement dated as of November 22, 2004 between Charter
Communications Holding Company, LLC as Lender and Charter
Communications, Inc. as Borrower.
10.9 Charter Communications Holding Company, LLC 5.875% Mirror Convertible
Senior Note due 2009.
10.10 Letter Agreement dated November 22, 2004 Among Charter Communications,
Inc., Charter Investment, Inc. and Vulcan Cable III Inc., the Members of
Charter Communications Holding Company, LLC Regarding Treatment of
Pledged Units.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Charter
Communications, Inc. has duly caused this Current Report to be signed on its
behalf by the undersigned hereunto duly authorized.
CHARTER COMMUNICATIONS, INC.
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Registrant
Dated: November 29, 2004
By:/s/ Paul E. Martin
Name: Paul E. Martin
Title: Interim Co-Chief Financial Officer,
Senior Vice President and Controller
(Co-Principal Financial Officer and Principal
Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description
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10.1 Indenture dated as of November 22, 2004 between Charter Communications,
Inc. and Wells Fargo Bank, N.A. as Trustee governing 5.875% Convertible
Senior Notes due 2009.
10.2 Charter Communications, Inc. 5.875% Convertible Senior Notes due 2009
Resale Registration Rights Agreement dated November 22, 2004.
10.3 Charter Communications, Inc. Share Loan Registration Rights Agreement
between Charter Communications, Inc. and Citigroup Global Markets, Inc.
dated November 22, 2004.
10.4 Collateral Pledge and Security Agreement dated as of November 22, 2004
between Charter Communications, Inc., as Pledgor and Wells Fargo Bank,
N.A. as Trustee and Collateral Agent.
10.5 Collateral Pledge and Security Agreement dated as of November 22, 2004
between Charter Communications Holding Company, LLC, as Pledgor, Charter
Communications, Inc., as Pledgee and Wells Fargo Bank, N.A. as Trustee
and Collateral Agent.
10.6 Share Lending Agreement dated as of November 22, 2004 between Charter
Communications, Inc., as Lender and Citigroup Global Markets Limited as
Borrower through Citigroup Global Markets Inc. as Agent for Borrower and
Citigroup Global Markets Holdings Inc. as guarantor of Borrower's
obligations and Citigroup Global Markets Inc. in its capacity as
Collateral Agent.
10.7 Charter Communications Holding Company, LLC Mirror Notes Agreement dated
November 22, 2004.
10.8 Unit Lending Agreement dated as of November 22, 2004 between Charter
Communications Holding Company, LLC as Lender and Charter
Communications, Inc. as Borrower.
10.9 Charter Communications Holding Company, LLC 5.875% Mirror Convertible
Senior Note due 2009.
10.10 Letter Agreement dated November 22, 2004 Among Charter Communications,
Inc., Charter Investment, Inc. and Vulcan Cable III Inc., the Members of
Charter Communications Holding Company, LLC Regarding Treatment of
Pledged Units.