Charter Communications was the talk of the loan market last week, following the company's announcement that its chief operating officer, David Barford, was placed on paid leave due to the pending status of a grand jury investigation. The bank debt traded in the 81 1/2 - 82 1/4 context following the announcement, although dealers noted that trading was thin as market players got comfortable with the news. By week's end, the paper had slipped even further to the high 70s.
As one of the largest and most liquid facilities, Charter's bank debt has been sinking in part because there are so many market players who do not have any more room for exposure to the paper. Would-be sellers, therefore, have nowhere to go, dealers explained. At current levels, some distressed funds are starting to look at the name, but they would like to see the levels dip a little more before buying, some traders noted.
Charter received a grand jury subpoena from the U.S. district attorney's office for the eastern district of Missouri earlier this year. The subpoena requested documents related to the company's past and present customers and the capitalization or expense of various costs and related matters.
There are two opinions regarding the current status of the investigation, according to one dealer. The first is that the investigators have been looking for so long that, if they haven't found anything by now, there is not going to be a problem. The second is that investigators have not stopped yet so there must be a problem. Calls to Kent Kalkwarf, cfo, and a company spokesman were not returned by press time.