Telewest yesterday moved closer to tackling its financial woes after creditors agreed a £3.5bn rescue deal that will leave shareholders owning just 1.5 per cent of the cable operator.
The deal, which has taken more than a year to negotiate, gives bondholders in Telewest 98.5 per cent of the company.
Telewest announced it had reached agreement about the debt-for-equity swap with the committee of bondholders, including Bill Huff, the tough-talking American fund manager who is thought to own the largest stake in Telewest, holding up to 20 per cent of its debt. Mr Huff led an offensive to drive a harder bargain from the company, negotiating the amount bondholders will get up from 97 per cent to 98.5 per cent of the restructured company.
Other bondholders who have signed up to the deal include Liberty Media, the investment vehicle controlled by the US media mogul John Malone, and IDT Corporation, which provides telecoms services to the wholesale and retail market.
While the deal marks major progress for Telewest, it could still be months before the complex financial overhaul is fully completed. The company, headed by Charles Burdick, is also yet to win the approval from its lending banks. They are understood to be still waiting to see the final term sheet giving details of the deal and remain worried about certain aspects.
However, most observers think Telewest's successful tying up of the restructuring deal moves it one step closer to a widely expected merger with its larger rival NTL. Both companies fell into difficulties after hefty capital expenditure on their cable infrastructure. A merger is seen as their best option to compete against their satellite pay-TV rival BSkyB.
Mr Huff has indicated he is keen for Telewest to follow NTL's lead and move its listing to the US - a suggestion which is opposed by some other parties, notably the banks which fear America's Chapter 11 rules could disadvantage them.
Analysts say complications involved with completion of Telewest's restructuring and NTL's need to refinance bank debts would make a merger unlikely until late 2004. With 4.4 million subscribers overall, both companies offer TV, phone and broadband internet services.Reuse content