Ba3 Corporate Family Rating, SGL-1 Rating and Positive Outlook Remain Unchanged
New York, January 19, 2011 -- Moody's Investors Service assigned a B2 (LGD5-81%) rating
to CCO Holdings, LLC's (CCO Holdings) $250 million add-on
to its existing $1.1 billion of 7% senior unsecured
notes due 2019 (also rated B2, LGD5-81%). CCO
Holdings, an indirect intermediate holding company of Charter Communications,
Inc. ("Charter" or the company) and Ba3-rated CCH II,
LLC (the legal entity where the fundamental benchmark Corporate Family
Rating, or CFR, is housed), recently issued the aforementioned
$1.1 billion of notes on January 4, 2010, using
the proceeds to repay outstanding amounts under subsidiary Charter Communications
Operating, LLC's ("CCO") B-1 and B-2 term loans coming
due in 2014. Proceeds from the $250 million add-on
are expected to be used similarly. Although leverage neutral,
the recent opportunistic refinancing activity continues a trend since
the company's emergence from bankruptcy to improve its liquidity profile
by raising cost-effective long-term financing and pushing
out maturities. All other ratings for Charter and its subsidiaries
remain unchanged, including the company's Ba3 CFR, Ba3 probability
of default rating and SGL-1 Speculative Grade Liquidity Rating.
The rating outlook remains Positive. LGD point estimates have been
revised to reflect the proforma capital structure assuming successful
completion of the pending transaction, as expected.
The Ba3 CFR broadly reflects the company's moderately high financial risk,
as evidenced by debt-to-EBITDA leverage of approximately
5.2x, and a highly competitive operating environment for
increasingly mature core product offerings. The rating is supported,
however, by the company's large size, expectations of continued
operational improvements and ancillary growth opportunities, and
meaningful perceived underlying asset value associated with its sizeable
(albeit still shrinking) 5+ million customer base.
Below is a summary of Moody's ratings for Charter's rated subsidiaries:
..Issuer: CCH II, LLC (CCH II)
....Corporate Family Rating, Ba3
....Probability of Default Rating, Ba3
....Speculative Grade Liquidity Rating,
SGL-1
....$1,766 Million of 13.5%
Sr Unsec Nts due 2016, B2 (LGD6-93%)
..Issuer: CCO Holdings, LLC (CCO Holdings)
....$250 Million Add-on to the
7% Sr Unsec Nts due 2019, B2 (LGD5-81%)
....$1,100 Million of 7%
Sr Unsec Nts due 2019, B2 (LGD5-81%)
....$1,000 Million of 7.25%
Sr Unsec Nts due 2017, B2 (LGD5-81%)
....$900 Million of 7.875%
Sr Unsec Nts due 2018, B2 (LGD5-81%)
....$700 Million of 8.125%
Sr Unsec Nts due 2020, B2 (LGD5-81%)
....$350 Million Sr Sec 1st Lien (but
CCO stock only; hence, effectively 3rd Lien) Credit Facility
due 2014, B1 (to LGD4-60% from LGD4-65%)
..Issuer: Charter Communications Operating,
LLC (CCO)
....$1,100 Million of 8%
Sr Sec 2nd Lien (CCO assets) Nts due 2012, Ba3 (to LGD3-48%
from LGD4-54%)
....$546 Million of 10.875%
Sr Sec 2nd Lien (CCO assets) Nts due 2014, Ba3 (to LGD3-48%
from LGD4-54%)
....$1,300 Million (approximately
$103 Million drawn) Sr Sec 1st Lien (CCO assets) Revolving Credit
Facility due 2015*, Ba1 (to LGD2-17 from LGD2-20%)
....$199 Million Sr Sec 1st Lien (CCO
assets) Non-Revolving Credit Facility due 2013, Ba1 (to LGD2-17
from LGD2-20%)
....$3,001 Million (approximately
$2,994 Million outstanding) Sr Sec 1st Lien (CCO assets)
Term Loan C due 2016, Ba1 (to LGD2-17 from LGD2-20%)
....$3,337 Million (approximately
$1,455 Million proforma outstanding for all pending transactions)
Sr Sec 1st Lien (CCO assets) Term Loan B-1 due 2014, Ba1
(to LGD2-17 from LGD2-20%)
....$500 Million (approximately $188
Million proforma outstanding for all pending transactions) Sr Sec 1st
Lien (CCO assets) Term Loan B-2 due 2014, Ba1 (to LGD2-17
from LGD2-20%)
* due Dec. 2013 if CCO still has more than $1 billion
of debt maturing between Jan. and Apr. 2014
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The principal methodologies used in this rating were Moody's Global Cable
Television Industry published in July 2009 and Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
New York
Russell Solomon
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Alexandra S. Parker
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653