NTL in crisis talks with France Telecom

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The Independent Online

NTL and France Telecom, its largest shareholder with a 25 per cent stake, were locked in crisis talks last night about how to restructure Britain and Europe's biggest cable group after shares plunged a further 10 per cent yesterday.

That left the company's market capitalisation at just $1.4bn (£1bn) compared with borrowings and convertible preference share debt of $21bn. Bankers said that some form of debt-for-equity conversion was virtually inevitable.

A senior credit market analyst with a US bank said: "The fact is that NTL has tons of debt and not enough cash flow. The equity market is now expecting equity dilution."

Meanwhile, NTL bonds were trading at about $0.50 for each $1.00 of face value. Analysts said that discount reflected "high risk", but cautioned that concerns about possible bankruptcy were wide of the mark.

The share price of NTL fell a further $0.61 to $5.06 in afternoon trading on the New York Stock Exchange. That reversed an after-hours rally in overnight US dealing on Tuesday. The continuing slide came as the company brought forward its second-quarter results presentation by two weeks to 26 July.

The liquidity crunch affecting the cable giant, which owns networks in the UK, France, Switzerland and Germany, is thought to have ended NTL's plan to float off its broadcasting transmission business as a separate tracking stock. The plan was proposed to raise cash without giving up the cash flow from NTL's most profitable unit.

Analysts said a mooted $2bn sale of the broadcasting transmission arm, which distributes ITV's signals, would not improve debt-to-cash flow ratios. But one observer noted there have been hints that NTL might sell broadcasting outright which "would improve sentiment".

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