Charter's credit rating takes a beating

Copyright 2002 St. Louis Post-Dispatch, Inc.
St. Louis Post-Dispatch...08/21/2002
From LexisNexis

Chern Yeh Kwok
From CED Broadband Direct, August 21, 2002

Standard & Poor's lowered its credit rating Tuesday on Charter Communications Inc., and Moody's Investors Service downgraded the cable operator's outlook to "negative" from "stable."

The agencies cited concerns about Charter's debt, its cash flow and uncertainty arising from an investigation of the company's accounting by a federal grand jury.

Last week, Charter received a subpoena from the US attorney's office for documents relating to customer accounts and bookkeeping.

The credit agencies said any financial restatement as a result of the investigation would be minimal, but Standard & Poor's said a wider investigation could lead to a further downgrade. It lowered Charter's credit rating to "B+" from "BB."

Charter's liquidity is "reasonably well-assured" as its bank lines of credit have not been drawn, Moody's said. Paul Allen's investments in Charter also could help to restructure the company's debt, the agencies said.

"We're disappointed with Standard & Poor's decision, especially given our reiterated 2002 revenues, cash flow and revenue generating unit growth targets," said David Andersen, a Charter spokesman.

In trading Tuesday, shares of Charter fell 14 cents, or 6 percent, to close at $2.20.