Charter Communications announced Thursday it plans to file for Chapter 11 bankruptcy as part of an agreement reached with its debt holders.
The announcement runs counter to the success its largest investor and Chairman Paul Allen received when he co-founded Microsoft with Bill Gates. Since that time, however, Allen has run into bumps along the way with his other investments.
Charter, which announced its plans to file for Chapter 11 while the markets were open, ended the day down a whopping 48.1 percent to close at nearly 3.5 cents a share.
By April 1, Charter plans to file for its reorganization bankruptcy, which is designed to provide $3 billion in new capital, a debt reduction of approximately $8 billion, and leave the company with $800 million in cash and short-term securities.
Charter CEO Neil Smit said in a statement:
We are pleased to have reached an agreement with such a significant portion of our bondholders on a long-term solution to improve our capital structure.
We are committed to continuing to provide our 5.5 million customers with quality cable, Internet and phone service, and through this agreement, we will be even better positioned to deliver the products and services our customers demand now and in the future.
The cable operator also noted that as part of the agreement, Charter's two subsidiaries will make approximately $74 million in interest payments to certain outstanding senior note holders, within the grace period of when its January 15 senior notes were due.