Charter Communications, the main provider of cable television to Madison residents, announced Thursday they will file for Chapter 11 bankruptcy in the face of massive debts.
The company agreed to declare bankruptcy by April 1 in a restructuring deal with creditors that will help to reduce Charter's debt by $8 billion. Charter said in a statement that company operations are expected to continue as normal, including service to customers and general workings of the business.
We are committed to continuing to provide our 5.5 million customers with quality cable, Internet and phone service,"" said Neil Smit, president and chief executive officer in a statement, ""And through this agreement, we will be even better-positioned to deliver the products and services our customers demand now and in the future.""
Yet Charter's stock value dropped by over 55 percent upon the announcement, declining to roughly $0.03 cents a share on the NASDAQ index. The stock was over $1.67 a share earlier in the financial year, according to nasdaq.com.
The company still has roughly $800 million in cash, according to the statement, which, when combined with other assets, should allow the company to pay normal operating costs and expenses.
Despite this, Charter still plans to raise $3 billion in capital to make the company more financially viable, though it will also make $74 million interest payments on the debts.
Donald Hausch, professor of operations and information management for the UW-Madison School of Business, said Chapter 11 bankruptcy is significantly different than Chapter 7 bankruptcy.
He said Chapter 11 filings are for companies that are an ""economically viable enterprise,"" but that due to financial constraints or issues must restructure to continue. Hausch said in a Chapter 7 filing the company would sell off assets and the company would essentially end.
