Investor wrangle holds up cable wedding

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The Independent Online

A row has broken out between NTL's debt holders and shareholders in both the company and its takeover target, Telewest, over how to structure the $12bn (£6.6bn) cable deal.

The move by both companies' shareholders could delay the merger still further. Telewest, seen as the junior partner, had hoped that the deal would be announced by the end of July.

The timetable has slipped in large part because of the uncertainty over whether to sell - and at what price - Telewest's content business, Flextech, which owns channels such as Bravo and LivingTV.

But investors in the two Nasdaq-listed companies are also rowing over the proportion of cash and shares to be used to fund the bid.

NTL's banks and bondholders, which hold its $4.2bn debt, want the company's chief executive, Simon Duffy, to use a cash element of around $3.5bn when it bids for Telewest. They want NTL to avoid raising more debt and weakening its balance sheet.

But NTL's shareholders are putting pressure on the company to pay $4.4bn in cash, or three-quarters of the $5.9bn estimated price for Telewest. The fewer the new shares issued to Telewest's investors in the enlarged company, the less widely its earnings will be distributed.

The Telewest shareholders are also keen for a higher cash slug because many gained only shares when Telewest agreed a $6.3bn debt-for-equity rescue in 2003 and now want to see a cash return for their investment.

The dispute is complicated because many of Telewest's largest shareholders also hold shares in NTL.

Hedge fund manager William Huff, through his company WR Huff Asset Management, is the largest shareholder in both companies.

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