Paul Allen's Charter to file Chapter 11

The cable operator, controlled by Microsoft co-founder Paul Allen, said in a statement it would file for Chapter 11 on or before April 1 after it reached a deal with some of its creditors helping to reduce its debt by around $8 billion. It had a debt load of around $21 billion as of Sept 30.

Various debt holders and bondholders will receive a mix of new notes, equity and cash depending on their seniority. Shareholders will not receive anything for common stock, which will be canceled.

Under the agreement around $10 billion of bank debt will remain on Charter's balance sheet untouched while the $11 billion held by bondholders will be reduced to $3 billion, people familiar with the agreement said.

The bondholders will have most of their notes converted to new notes and common stock or warrants to buy common stock.

Paul Allen will continue as an investor and retain the largest voting interest in Charter.

Allen's various non-equity holdings in Charter including debt and preferred were converted to equity under the new capital structure, these people said.

Chief Executive Neil Smit said in a statement the agreement covered "a significant portion" of bondholders.

The company, which has more than 5.5 million subscribers, said it would make an overdue interest payment of $74 million before a final deadline of February 15.

Charter said that as of February 11 it had more than $800 million in cash on its balance sheet. The company said it believed its liquidity combined with its cash from operating activities would be sufficient to meet its projected cash needs.

The company said it expects fourth quarter earnings before interest, tax, depreciation and amortization will grow to 9.7 percent to $620 million. It said revenue is expected to grow 7 percent to $1.656 billion and expects to record an impairment charge of $1.5 billion.

It said capital expenditures would be about $264 million.

Charter also said it expects to lose around 75,100 basic video subscribers but add around 22,300 net digital video subscribers during the fourth quarter.

The company said it will add 22,900 high-speed Internet customers and 75,200 phone subscribers for the period.

(Reporting by Yinka Adegoke; Editing by Bernard Orr)