Bondholders give NTL breathing space

NTL: Last-ditch talks with bondholders

Bondholders in NTL have told the debt-ridden cable company not to pay the $95m (£66m) in interest that was due on Monday.

The move affords at least temporary relief to the UK's biggest cable company, which is weighed down by debts totalling $17bn (£12bn).

NTL now has a 30-day "grace period" in which to make a final decision on whether to make the payment.

The company on Monday said it had the funds to meet the interest obligations and continue trading but had decided to withhold the payment at the request of the "supportive" bondholders.

It said the request came from an unofficial committee of bondholders who indicated they were representing the holders of about 50% of NTL and its subsidiaries' bonds.

Warning

If NTL fails to make the payment within the 30 days, it will formally default on its debt - a move that is widely expected to pave the way for bondholders to swap their debt for a controlling shareholding in the company.

The agreement on withholding the interest payment comes days after the company warned it might run out of money while it repaired its finances.

NTL ran up its massive debts after a rapid expansion programme in which it built cable networks and bought up other cable companies operating in the UK.

Substantial stake

Reports that the company was heading for trouble with its finances surfaced last year, and in February it appointed advisers to lead a complex restructuring of its debts.

The eventual deal is expected to involve NTL bondholders having their debt converted into shares.

This will give them a substantial ownership stake in a restructured business and greatly reduce the value of existing shareholders' holdings.

Some reports have said existing shareholders face owning as little as 3% of NTL after the debt-for-equity swap.

Bankruptcy speculation

NTL also fended off suggestions in a Sunday newspaper report that it was ready to file for bankruptcy protection in the US.

It said the Observer report was "just speculation".

The company's shares were suspended from trading in New York last Thursday after remaining sunk at low levels for too long.

They were last quoted at 20 cents, down from a 2001 peak of $43.