Teaching Pigs How To Fly

As Mr.Taleb is busy with his project on lecturing birds how to fly, I’ve taken upon myself the heavy burden of teaching you all how pigs in fact do fly. The lecture will consist of a series irregular short-stories with examples on how to make a totally trashed company reemerge with a better funding and better loan requirements than before it went bust. Today’s happy story is about Charter communication.

“Drive-by Junk Deal”

Leveraged Finance News


The company, who emerged from bankruptcy late last November, says in a statement Wednesday that it plans to issue $1,6bn in junk bonds and use all the money to buy other junk bonds that has a little longer period of maturity. Now, we’re cooking!

Charter Communications plans to price $1.6 billion in junk bonds in order to finance a tender offer for two tranches of senior notes, the company says in a statement Wednesday.

The St. Louis-based cable service provider will issue $800 million in senior notes due 2018 and $800 million in senior notes due 2020 through its CCO Holdings subsidiary, it says.

The lead underwriter JP Morgan is expected to price the deal today, according to Leveraged Finance News.

(I restrain myself from making any comments on that matter).

The company will use the proceeds to finance a tender offer for $800 million in 8.75% senior notes due 2013 and $770 million in 8.375% senior second-lien notes due 2014.

Charter launched the tender offer today and will pay bondholders just more than $1,030 per $1,000 if they tender before April 27. The offer expires May 11.

Moody’s Investors Service assigned a B2 rating to the proposed notes.

Standard & Poor’s assigned a B rating.

Charter emerged from bankruptcy late last November. Its restructuring have reduced the company’s debt by $8 billion, or approximately 40%.

And there you go; borrowing money again as nothing has happened.

The trick is to reduce your loan portfolio a bit – at least on balance – and then you can borrow it all back again.

And probably even more.


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