Feb. 12 (Bloomberg) -- Charter Communications Inc., the money-losing cable-television company, said it plans to file for Chapter 11 bankruptcy as part of a financial restructuring on or before April 1.

Charter said today in a statement that it reached an agreement with a committee of some debt holders to reduce its obligations by about $8 billion. Controlled by Microsoft Corp. co-founder Paul Allen and based in St. Louis, Charter has about 5.6 million customers in 28 states, according to its Web site.

The cable company has sold the most U.S. high-yield bonds of any company in the past decade, according to data compiled by Bloomberg. Allen bought Charter in 1998, amassed the company’s debt burden while building it into the fourth-largest U.S. cable provider. Charter, which has reported losses every year since going public in 1999, added telephone, digital-TV and Internet services to compete with larger rivals and fiber-optic networks.

“The restructuring was coming one way or another,” Matt Dundon, managing director of distressed analysis at Miller Tabak Roberts Securities, said in a phone interview. “Even with the $8 billion debt reduction figure, the company is still heavily indebted and vulnerable to further restructuring if EBTDA takes a turn for the worse.”

‘Financial Alternatives’

In December, Charter started talks with bondholders on “financial alternatives” including restructuring. Through the first three quarters of 2008, Charter lost almost $1 billion.

Charter’s $1.5 billion of 10.25 percent notes due in 2010 rose about 10 cents to 64 cents on the dollar at 2:40 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The securities traded as low as 29 cents on the dollar in December and as high as 101 cents last June, Trace data show.

In a separate filing, Charter predicts 2008 adjusted profit before interest, taxes, depreciation and amortization will be $2.32 billion, a 10 percent increase from 2007 and in line with analysts’ estimates. The company expects its annual sales rose 7.9 percent to $6.48 billion, also matching estimates.

“Our operational results continue to reflect the underlying potential of our business,” Chief Executive Officer Neil Smit said in the statement.

New subscriber growth slowed 55 percent in the fourth quarter as Charter netted only 120,400 additional digital-video, Internet and telephone customers compared with 265,300 a year earlier. Time Warner Cable Inc. also reported slowing growth in the fourth quarter as more customers elected to forgo premium services such as digital video recorders.

Ratings Lowered

Charter had its debt rating lowered two levels by Moody’s Investors Service, signaling the cable-television carrier is at increasing risk of default.

The rating fell to Caa3 from Caa1, New York-based Moody’s said in a statement yesterday. The new rating, nine levels below investment grade, reflects the likelihood of “imminent default” after Charter missed an interest payment on its debt last month, the ratings service said.

Last week, Charter said it hired Greg Doody, the lawyer who helped Calpine Corp. emerge from bankruptcy.

Charter fell 3.4 cents, or 48 percent, to 3.7 cents in Nasdaq Stock Market trading at 4 p.m. The stock reached an all- time low of 2.5 cents earlier in the day.

To contact the reporters on this story: Dawn McCarty in Wilmington, Delaware at dmccarty@bloomberg.net; Kelly Riddell in Washington at kriddell1@Bloomberg.net.

Last Updated: February 12, 2009 16:12 EST