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Charter's debt woes erase $7 billion investment by Microsoft founder

January 29th, 2009 12:00 am by Staff Report

How do you lose $7 billion?

According to a report in the Chicago Tribune that's a question for Microsoft Corp. co-founder Paul Allen, who has seen his massive investment in cable TV operator Charter Communications Inc. all but vanish.

Charter was Allen's biggest investment after he left Microsoft in 1983. He is Charter's chairman and holds a 51 percent stake in the company. But the stock is now 8 cents per share and it is facing bankruptcy, analysts said.

Allen wouldn't comment for the Tribune report, and neither would Charter, other than a statement from Chief Executive Neil Smit, who said the company is continuing to negotiate with its bondholders. Analysts said Charter is likely to try rolling over its debt into new loans payable later, or swapping its debt for equity in the company.

Charter missed a debt payment this month, and about $1.9 billion of debt comes due next year. Overall, more than half of Charter's $21 billion in total borrowings will mature by 2013.

Tuna Amobi, an analyst with Standard & Poor's, doesn't think it likely that Allen will pump in more money. And Charter acknowledged in a Securities and Exchange Commission filing that if it can't refinance its debt, it could be forced to seek bankruptcy protection.


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