Charter Communications' bank debt slipped in trading after the company announced it has lost subscribers. The "B" loan was trading actively at 99 1/4, which is between 1/8-1/4 point down, said a trader. The "A" loan saw less action and was quoted unchanged at 98 1/8. A spokesman declined comment. According to the company's 8-K, revenue growth was primarily offset by increased programming, customer care and service related expenditures, resulting in compression of the adjusted EBITDA margin.
The drop is alongside news that Charter may issue equity to back a purchase of a piece or all of Adelphia Communications, which is being auctioned at the end of the month as part of its bankruptcy process. A move by Charter to decrease leverage would be a boon to investors. Charter faces a heavy debt redemption burden next year and needs to raise cash. "Available options include an over-equitized purchase of assets by Paul Allen, a rights offering or exchanges for debt instruments," said Aryeh Bourkoff, managing director and cable/satellite analyst at UBS.