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Charter's $300 million loan from Paul Allen starts at 13% interest rate, 50 bps commitment fee
By Sara Rosenberg
New York, April 15 - Charter Communications Inc. entered into a commitment letter with Vulcan Inc., an affiliate of Paul Allen, under which Vulcan will lend Charter Communications VII, LLC up to $300 million.
This credit facility includes a letter of credit subfacility of up to $100 million, according to a filing with the Securities and Exchange Commission.
Interest on the loans would be initially 13% per annum, reducing to 12% per annum when CCH II, LLC became the borrower under the facility. If letters of credit are issued, the borrower would pay a letter of credit fee of 8% per annum.
There is a facility fee of 1.5%, payable over three years and a commitment fee on the undrawn portion of the facility of 0.5% per annum.
The loans and letters of credit can only be used to repay loans or replace letters of credit under the operating subsidiaries' credit facilities in order to remain in compliance with leverage ratios or to create cushions in excess of the minimum amount necessary to comply with the ratios.
Security will be a lien on the cable company's corporate headquarters in St. Louis, certain corporate aircraft and certain equity interests and is on a pari passu basis by liens or security interests granted on any assets or properties to secure any other indebtedness.
The proposal from Paul Allen for the loan was received in February and was approved by a special committee and the board of directors on April 11. The facility is subject to the negotiation and execution of definitive documentation by June 30.
Full commitment letter at:
http://www.sec.gov/Archives/edgar/data/1091667/000095012303004266/y85418exv10w28.htm
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