Charter Sells $1.5 Billion in Bonds to Pay for Deal

Cable television operator Charter Communications Inc. on Thursday sold $1.5 billion worth of junk bonds, 50% more than planned, to buy cable systems from rival AT&T; Broadband.

To get the sale done, however, St. Louis-based Charter had to pay yields as high as 11.75% in an improving but still skittish junk bond market that remains shut tight to many companies.

Charter, controlled by Microsoft Corp. co-founder Paul Allen, has now completed the largest and second-largest junk bond sales of the year. The company sold $1.75 billion of the bonds in January.

“Companies with stable cash flows and businesses and a track record are still able to do sales,” said Eric Misenheimer, bond investment advisor for Northern Trust Global Investments in Chicago.

Charter, the No. 4 U.S. cable TV operator, agreed to swap cable systems with No. 1 AT&T; Broadband, a unit of AT&T; Corp., in February.

It is adding systems serving about 574,000 customers in the St. Louis area and parts of Alabama, California and Nevada, for which AT&T; will receive $1.04 billion in cash, $500 million in Charter stock and two Florida cable systems serving 62,000 customers.

Charter said it will use the bond sale proceeds to pay off much of that cash outlay.

Shares of Charter rose 41 cents to close at $22.45 on Nasdaq, while AT&T; shares fell 16 cents to close at $21.41 on the New York Stock Exchange.