SMG shares rise on sale of Telewest holding
The troubled cable company Telewest Communications was yesterday well on the way to raising almost £50m by selling its 16.9 per cent stake in the media group SMG as well as a television studio.
The company, which is still trying to thrash out a rescue refinancing package with bondholders and banks, said it had placed the SMG shares with institutional investors at 85p a share, raising £45.1m.
Shares in SMG, which had been under pressure since Telewest announced in August that the stake was up for sale, closed up 8 per cent at 97p. Telewest stock, meanwhile, finished 0.09p higher at 1.3p.
Telewest acquired the stake in SMG when it merged with the content business Flextech two and a half years ago. Flextech paid £76m for the SMG stake in 1995.
A spokesperson for Telewest said the company had considered a variety of options, including selling the shares to a strategic investor, but decided selling the stock to institutions would be quicker.
Telewest also said yesterday it had agreed to sell Maidstone Studios, a television production and post-production business, for £4.25m to the privately owned Dovedale Associates.
The proceeds from both deals will be reinvested in the business. "We are pleased to have placed the SMG shares at a fair price and the proceeds will be utilised to further our progress in our core business," Charles Burdick, Telewest's managing director, said.
The deals come less than a week after Telewest's planned debt-for-equity swap ran into trouble when one of its creditors, the French bank Crédit Agricole, filed a petition for the company to be wound up.
The company said then it planned to deal with the claim as part of its overall restructuring and did not believe the legal action would delay that process. Last week, Telewest also defaulted on £68m of bond interest payments as it continued to hammer out the details of its proposed refinancing, which will see shareholders left with just three per cent of the business.
Telewest is ultimately expected to merge with its business rival NTL.
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