Charter Watch

Could Charter be the next MSO to go the private route? Controlling shareholder Paul Allen said in a regulatory filing that he’s considering various alternatives, including a going-private transaction in which he could acquire all of Charter’s stock. Other possibilities include recapitalization and restructurings to reduce debt. Allen’s SEC filing updated previous disclosures about potential future actions in regard to Charter. Charter also enacted a shareholder rights plan Tues essentially limiting the ability of shareholders to own more than 5% of its Class A stock without board’s authorization. Analysts agree that this has nothing to do with preventing a hostile takeover of the firm (Allen controls more than 90% of Charter’s vote, after all) and is instead to preserve the MSO’s deferred tax assets. Pali Research’s Rich Greenfield says the plan is designed to prevent triggering of an IRS rule that could negatively impact Charter’s ability to use its $7.1bln of net operating losses. Citigroup called the rights plan a "slight positive… While we’ve always used the gross deferred tax assets in our valuation, today’s development helps ensure that this value is captured by equity holders."