NTL and Telewest inch towards refinancing deals

The troubled cable companies NTL and Telewest Communications are inching closer to completing financial restructuring packages to secure their futures.

The process, however, is taking longer than both originally hoped. Telewest had expected to provide an update on its refinancing talks by the end of November. Its rival NTL, which agreed a complex refinancing package in the spring that saw it file for bankruptcy protection in the US, had originally hoped to put its financial woes behind in October.

NTL said yesterday that it expected to reach agreement on the various elements necessary for it to "consummate its plan of reorganisation" in "the very near future".

By comparison, Telewest is only at the beginning of a process designed to fix its balance sheet and has yet to sign firm deals with its bankers. Speculation was mounting yesterday, however, that the company was close to announcing it had agreed the terms of a new £2bn bank loan which will replace an existing £2.25bn facility.

A spokesperson for Telewest would not comment on how the talks were going yesterday other than to reiterate previous statements that the company was making "good progress".

Sources familiar with the situation echoed that sentiment but said they did not think an announcement on a deal would come this week.

Telewest has already agreed to hand bondholders control of the business by giving them 97 per cent of the equity in return for £3.5bn of debt. Consequently, shareholders will be left with just 3 per cent of the company.

Both NTL and Telewest got into financial difficulties after massive investment in their cable networks left them weighed down with billions of pounds of debt.

NTL was forced into a similar debt for equity swap that saw bondholders seize control by agreeing to convert $10.9bn of debt into equity. Under the terms of its refinancing, the company will be split in two. NTL's bondholders will own all of NTL UK and Ireland and around 86.5 per cent of the European operation NTL Euroco.

Analysts have long predicted that NTL and Telewest will join forces once they have both emerged from their respective restructurings and fixed their balance sheets.