More junk from Charter (CHTR)

Charter Communications (NASDAQ: CHTR) raised another $1 billion in junk bonds. That may not help. The cable company is a potential candidate for a Chapter 11 filing.

According to The Wall Street Journal, "Rating company Standard & Poor's affirmed its single-B-minus credit rating on Charter, but revised the loss-making company's outlook to negative from stable due to increased concerns about its liquidity."

It is amazing that a company in such bad shape could raise money at all. The firm is controlled by billionaire Paul Allen. It has $19 billion in debt already. In the December quarter, the company had only $85 million in operating profit on $1.553 billion. Debt service in the quarter was $464 million.

Charter has to spend the money to upgrade its network the same way that other cable companies are. Competition from telecom fiber offering and satellite TV are making the cable industry's life harder. Charter does not have access to the kind of capital it may need because its financials are stretched so thin.

The company's stock has fallen from a 52-week high of $4.93 to $0.93. If Charter sees any fall-off in operating income, the stock could go to zero.

Douglas A. McIntyre is an editor at 247wallst.com.