INFORMATION
REQUIRED IN REGISTRATION STATEMENT
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Item 1.
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Description
of Registrant's Securities to be
Registered.
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On December 10, 2008, the Board of
Directors (the "Board") of
Charter Communications, Inc. ("Charter")
approved of an amendment (the "Amendment")
to the Rights Agreement dated August 14, 2007 (the "Rights
Agreement") between Charter and Mellon Investor Services LLC
(''Rights
Agent"). The Amendment was further approved by unanimous
written consent of the holders of a majority of the Class B Common Stock of
Charter by resolution dated December 23, 2008.
The
Rights Agreement is currently set to terminate on the earlier to occur of: a
specified event among a set of events, or the fixed date of December 31,
2008. The Amendment extends the fixed date to December 31,
2009.
The
Rights Agreement was adopted by the Board in an effort to protect stockholder
value by attempting to protect against a possible limitation on our ability to
use our net operating loss carryforwards (the "NOLs") to
reduce potential future federal income tax obligations. Charter has
experienced and continues to experience substantial operating losses, and under
the Internal Revenue Code of 1968, as amended (the "Code") and rules promulgated
by the Internal Revenue Service, Charter may "carry forward" these losses in
certain circumstances to offset any current and future earnings and thus reduce
our federal income tax liability, subject to certain requirements and
restrictions. To the extent that the NOLs do not otherwise become
limited, Charter believes that it will be able to carry forward several billion
dollars of NOLs, and therefore these NOLs could be a substantial asset to
it. However, if Charter experiences an "Ownership Change," as defined
in Section 382 of the Code, its ability to use the NOLs could be substantially
limited, and the timing of the usage of the NOLs could be substantially delayed,
which could therefore significantly impair the value of that asset.
The Rights Agreement is intended to deter any such Ownership Change without the
Board's approval through a dividend distribution of one preferred share purchase
right (a "Right")
for each outstanding share of Charter's Class A common stock, par value $0.001
(the "Class
A Common
Stock") and Class B common stock, par value $0.001 (the "Class B Common
Stock") on August 31, 2007. Subject to the terms, provisions
and conditions of the Rights Agreement, if the Rights become exercisable, each
Right would initially represent the right to purchase from Charter one
one-thousandth of a share of Charter's Series B Junior Preferred Stock, par
value $0.001 (the "Preferred
Stock"). If issued, each fractional share of Preferred Stock
would give the stockholder approximately the same dividend, voting and
liquidation rights as one share of Charter's Class A Common
Stock. However, prior to exercise, a Right will not give its holder
any rights as a stockholder of Charter, including without limitation any
dividend, voting or liquidation rights. The Rights are not
exercisable until 10 days after a public announcement by Charter of an event of
ownership change as described in further detail in the Rights Agreement upon the
terms and conditions also as more fully set forth therein. Further, upon an
issuance of Class A Common Stock and/or Class B Common Stock under the Rights
Plan, additional membership units will be issued to the Charter, as holder of
the Class B common membership units, by Charter Communications Holding Company,
LLC ("
Holdco "), to mirror
at Holdco
the economic effect of such issuance of common stock pursuant to that certain
letter agreement for mirror rights dated August 14, 2007 by and among Charter,
Charter Investment, Inc., and Vulcan Cable III Inc. (the "Holdco Mirror
Agreement"). Holders of the Holdco common membership units that are
convertible into shares of our Class B Common Stock will have equivalent rights
which may be exercised, on generally the same terms and conditions as set forth
in the Rights Plan, for additional Holdco common membership
units. Concurrent with the Amendment, the parties to the Holdco
Mirror Agreement have approved and executed an amendment also extending the
expiration date of the Holdco Mirror Agreement to December 31, 2009 (the "Holdco
Mirror Agreement Amendment").
Before the Distribution Date (as
defined in the Rights Agreement), the Board may amend or supplement the Rights
Agreement without the consent of the holders of the Rights in respect of our
Class A Common Stock. After the Distribution Date, the Board may
amend or supplement the Rights Agreement only to cure an ambiguity, to alter
time period provisions, to correct inconsistent provisions or to make any
additional changes to the Rights Agreement, but only to the extent that those
changes do not impair or adversely affect any rights holder and do not result in
the rights again becoming redeemable. Notwithstanding the foregoing, Charter and
the Rights Agent shall not supplement or amend the Rights Agreement without the
prior approval of the holders of a majority of the Class B Common
Stock.
A copy of the Amendment is attached
hereto as Exhibit 1 and is incorporated herein by reference. The foregoing
descriptions of the Amendment and the Rights Agreement do not purport to be
complete and are qualified in their entirety by reference to the Amendment and
the Rights Agreement.
The
following exhibits are filed as part of this registration
statement: