Charter Communications Cable Firm in Bankruptcy

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Cable television system operator Charter Communications, struggling with a $21 billion debt load, is preparing a bankruptcy filing, according to sources familiar with the situation.

The action comes after the company missed a $73.7 million interest payment in mid-January and as it continues to negotiate a financial restructuring with its bondholders, sources said on condition of anonymity.

The timing of a possible bankruptcy filing is unclear, and there is a possibility the company could negotiate a so-called "prepackaged" bankruptcy with bondholders, one of the sources said.

A prepackaged plan is a cheaper and quicker way to go through the bankruptcy process because major creditors vote on the terms of the bankruptcy plan before it is filed with the court.

In the past, some companies have avoided bankruptcy by renegotiating their debt.

Charter, whose largest single investor is Microsoft� co-founder Paul Allen, first said in December it had called in investment bank Lazard to initiate discussions on a reorganization of its debt with bondholders. It then opted not to make the mid-January payments on those bonds.

Standard & Poor's cut the company's corporate rating to 'D' from 'CC' after it missed the payments.

Charter, which has around $1.9 billion in principal debt due in September 2010, and more than $21 billion of debt on its balance sheet as of Sept. 30, has a Feb. 15 deadline to make the interest payment. Charter said in mid-January that it had $900 million in cash available.

Charter, the fourth largest U.S. cable operator, has seen the market value of its Nasdaq-listed common stock fall to about $37 million this year compared to a market value of more than $5 billion in 2001, according to Reuters data and U.S. Securities and Exchange Commission filings.