Charter Communications traded in the Street at 87 1/4 last Tuesday. Traders said the name had fallen back a point last week after a brief uptick that followed a report that majority equity holder Paul Allen would look to take the company private. Dealers said the paper was pulled back down by the current market mood.
While market players noted that Allen's future plans are still uncertain, they were divided on how the privatization would affect the company's bank debt. One trader said that taking Charter private could ultimately delever the company and that Allen's support for the company was encouraging. But another trader questioned the final outcome. "Who knows," he said. "He could take it private and leverage it up."
Charter's bank debt has been sliding since April, when it was trading in the mid- to high 90s. It first began to slip in sympathy with Adelphia Communications, but the paper continued its slide as the cable sector fell out of favor. Calls to Kent Kalkwarf, cfo, were not returned.