NTL seeks second refinancing after dollar's fall

NTL, the cable company that underwent an emergency $10.9bn (£6.9bn) financial rescue a year ago, is to begin talks with its lending banks about a second refinancing to bolster its balance sheet.

NTL, the cable company that underwent an emergency $10.9bn (£6.9bn) financial rescue a year ago, is to begin talks with its lending banks about a second refinancing to bolster its balance sheet.

The company, which unusually is US listed but has all its operations in the UK and continental Europe, has seen the dollar value of its sterling-denominated debt soar as a result of the weakness of the US currency.

NTL is to meet with its banking syndicate to hammer out a refinancing package for a £2.58bn credit facility that under the present agreement must be repaid in 20 months' time.

However, NTL wants its banks to agree to new terms that would see the revolving credit facility renegotiated to include lower interest rates and an extended repayment date.

Simon Duffy, the former EMI Group finance director who is now the chief executive of NTL, hopes that having already persuaded the banks to agree to the original restructuring, which saved the cable company from going bust, they will back this further revamp. He also hopes that a successful £840m rights issue the company completed with its shareholders in November will persuade its creditors that the company has a long-term future. Recent financial results from NTL also suggest that the company's operating performance is improving, with more households in the UK signing up for its cable TV services.

People familiar with the planned talks said Mr Duffy hoped to complete the refinancing negotiations before the end of March. At the moment the £2.58bn credit facility has a potentially crippling interest rate of 7.55 per cent, implying an interest bill on this facility alone of £195m a year.

However, as a US-based company with US shareholders, the weakness of the dollar since the agreement was put in place has made the sterling-denominated debt even more of a burden for the company.

Two years ago NTL was on the verge of collapse after taking on a mountain of debt to fund a takeover binge aimed at dominating the UK's new cable industry in the 1990s. The peak of its hyperactivity was the acquisition of the consumer operations of Cable & Wireless in July 1999.

That deal was referred to the Competition Commission before being approved in May 2000. By then, stock markets had begun to crash and the technology bubble had burst, but not before NTL had spent $12bn laying a fibre optic network passing 8.8m UK homes and 600,000 businesses.

The legacy was to file for protection from its creditors in May 2002, under America's Chapter 11 bankruptcy process, from which it emerged a year ago. The current £2.58bn revolving credit facility makes up the bulk of NTL's bank financing, the rest being a £200m term facility with a 9 per cent interest rate that must be repaid in six quarterly installments beginning on 30 June, 2006.

NTL also has three bond issues outstanding: a sterling-denominated bond of £135m with a 10 per cent rate of interest due to be repaid in February 2008; a $110m bond with a 9.125 per cent interest rate due at the same time; and a $517.3m debenture with an 11.2 per cent interest rate due in November 2007.