CHARTER COMMUNICATIONS - IN TROUBLE

Charter Communications Inc. has hired law firm Kirkland & Ellis and investment bank Lazard Ltd. to advise on a possible bankruptcy, Bloomberg reported, citing people familiar with the matter. Kirkland's Rick Cieri is providing counsel, Bloomberg said. If the St. Louis-based cable company decides in favor of bankruptcy, it may file as soon as next week, said one of the people, who declined to be identified because the discussions are private, Bloomberg reported. Charter, the dominant subscription TV provider in the Madison area, has more than $21 billion in debt and last week announced that two of its business units missed $73.7 million in interest payments on $1.153 billion in senior notes due last Thursday. The terms on the debt permit a 30-day grace period, which would give the company through Feb. 15 to make the interest payments, Charter said. If the payments are not made by then, the bonds would be in default. If that happened, holders with 25 percent of the principal amount on the notes could call them, asking for the full amount due to be paid immediately, according to a regulatory filing Charter made Thursday with the Securities and Exchange Commission. The company has been in discussions with bondholders about improving its capital structure, and earlier last week announced changes to its executive compensation related to potential restructuring of its debt. The company, which is controlled by Microsoft Corp. co-founder Paul Allen, warned last year it could be forced to seek bankruptcy protection if it failed to raise additional funds to finance its cash needs by 2010. Last month, Moody's Investors Service lowered its rating on Charter and said default was likely imminent. Major bondholders are also organizing for a possible bankruptcy filing, with senior noteholders hiring investment bank Houlihan Lokey, Bloomberg reported. The Los Angeles-based firm has advised on some of the biggest debt restructurings of all time, including the Lehman Brothers Holdings Inc. and WorldCom Inc. bankruptcies. Allen, the co-founder of Microsoft Corp., has held a controlling stake since 1998 in the company, which hasn't turned a profit since going public a decade ago. Allen is represented by Nick Saggese of Skadden, Arps, Slate, Meagher & Flom LLP in the talks and is being advised by Miller Buckfire & Co., Bloomberg reported. Cieri represented Federated Department Stores Inc. in the 1990s, during its reorganization while with the Jones Day firm. After Federated came out of Chapter 11, he represented the department store chain when it bought Macy's Inc. out of bankruptcy. He has since helped reorganize such companies as Calpine Corp., LTV Steel Co. and Trans World Airlines Inc. Charter spokeswoman Anita Lamont and Kate Kortenkamp, a spokeswoman at Kirkland & Ellis, declined to comment, Bloomberg said.