BILLIONAIRE CHARTER-ING ANOTHER TRIP TO FAILURE
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Tech legend Paul Allen – who lost more than half of his $36 billion Microsoft fortune while bankrolling flops – is pulling the plug on one of his worst bets, cable dud Charter Communications.
Charter by April will dodge into bankruptcy court, dashing any new hopes for Allen’s dream of ever using Charter as a platform for a wonderland of online ventures, from movies and used cars to music and games.
Instead of revolutionizing online delivery for Allen’s moribund and shelved ventures, Charter became mired in technical disasters as well as a devastating fraud in which the FBI arrested insiders for cooking company books.
Allen had sunk $7.6 billion into the cable firm over the years and is left holding much of the bag.
As Microsoft’s co-founder, Allen is still worth $16 billion, and can afford the $374,000 weekly tab for maintaining his 414-foot yacht, Octopus. He also can keep paying huge salaries for players and coaches on his sporting teams, the Seattle Seahawks and the Portland Trailblazers.
In the Charter bankruptcy plan, debt holders and bondholders will receive a mix of new notes, equity and cash depending on seniority. Shareholders will receive nothing for their common stock.
About $10 billion of bank debt will remain on Charter’s books, while the $11 billion held by bondholders will be reduced to $3 billion, sources said. Allen will retain the largest voting interest.
After suffering embarrassing flops on more than 130 tech ventures he has backed, for a total of about $9 billion, Allen is now looking to banking for his new fortunes.
His Vulcan Ventures fund is considering rolling the dice for up to $15 billion with a proven winner, celebrated banking analyst Richard Bove, in a venture to buy up banks wrecked in the recession.