Dec. 29 (Bloomberg) -- Charter Communications Inc. bonds rose to the highest since October after the fourth-largest U.S. cable company finalized a $927 million debt tender that cuts interest costs and said it will buy back shares from Oaktree Capital Management LP and Apollo Global Management LLC.
Its $1 billion of 7.25 percent notes due in October 2017 gained 1.5 cents to 106 cents on the dollar as of 10:30 a.m. in New York, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. The securities, which yield 5.8 percent, are at the highest level since Oct. 26.
Charter aimed to refinance as much as $1 billion, including high-cost debt that funded its November 2009 bankruptcy exit. The St. Louis-based company has gained 45 percent in 2011 as it pushed out maturities and repurchased 12.7 percent of its outstanding shares, even after reporting net losses in all except one of its quarters since the reorganization.
“It’s a great transaction for the company,” said Lance Vitanza, a senior media analyst for CRT Capital Group LLC in Stamford, Connecticut, who estimates the tender will save Charter $30 million a year or more in annual interest expense.
Investors offered $407 million of 2012 notes, $234 million of 2014 bonds and $669.4 million in 2016 notes, Charter said today in a statement. The company accepted all of the 2012 and 2014 tender offers and $286 million of the 2016 note offer.
Charter arranged a $750 million term loan this month, according to data compiled by Bloomberg. It also sold $750 million of 7.375 notes due June 2020 on Nov. 30 to finance the tender. The bonds, which priced at 100 cents on the dollar to yield 558 basis points more than similar-maturity Treasuries, last traded at 105.4 cents on the dollar, Bloomberg and Trace data show.
The second-lien notes due in 2012 have an 8 percent coupon, the 2014 bonds pay 10.875 percent and the 2016 senior notes carry a 13.5 percent coupon.
“The transaction favorably extends the maturity profile without materially impacting leverage and could modestly reduce interest expense,” Moody’s Investors Service said in a Nov. 30 statement. The rating company grades Charter Ba3.
Charter bought back about 4.125 million shares of its class A stock at a cost of about $200 million, the company said in a separate statement today. It has agreed to purchase a further 5.891 million in privately negotiated transactions.
Charter rose 52 cents, or 0.9 percent, to $56.48 as of 1:09 p.m. in New York.
Analysts surveyed by Bloomberg don’t expect the company to earn a profit through next year.
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