NTL unveils debt-swap rescue plan

12 April 2012

AILING cable group NTL has set out the terms of a rescue plan in which its bondholders will swap $10.6bn (£6.9bn) in debt for equity and inject a further $500m into the company.

The rescue, aimed at slashing $17bn of bond and bank debt, will also involve NTL filing for US Chapter 11 bankruptcy protection, leaving its operations free to continue to do business.

The deal will save NTL $800m a year in interest. NTL will split into two firms, one housing its UK and Ireland operations, the other its continental European interests.

'The agreement in principle we are announcing today is a major step towards our goal of ensuring the successful completion of the recapitalization that NTL announced in January,' said chief executive Barclay Knapp. 'We are currently working with all parties in our capital structure, including the company's bank lenders, to finalize these arrangements.'

NTL still needs to reach an agreement with its commercial banks. But it said it expected the refinancing would be in place by August or September.

The company said while it is working out its finances customer service will be unaffected, suppliers will be paid and NTL management will remain in place.

There has been pressure for at least some boardroom departures following the company's downfall. Knapp led NTL on a debt-fuelled $18bn buying spree but demand for the company's phone, TV and internet services failed to meet expectations.

NTL's bondholders will receive 100% of the initial equity of NTL UK and Ireland and about 86.5% of the initial equity of NTL Euroco. Shareholders including France Telecom and Cable & Wireless will be offered new shares through a rights issue.

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