NTL warns of cash crisis

NTL is struggling to repay its debts

Britain's biggest cable company NTL has said it may run out of money to run its business while it refinances its debts.

There can be no assurance that we will successfully complete recapitalisation or financing in a timely manner to sustain the company's operations

NTL statement

NTL's chief executive Barclay Knapp said talks with its creditors had been "constructive", but the company warned it may be unable to agree terms of a bail-out.

The company also reported an £8bn write-down of assets and goodwill, but posted a rise in underlying earnings to £492m for 2001.

Last month NTL said it could meet all its debt repayments after speculation that it may default.

'Constructive' talks

NTL ran up massive debts after a rapid expansion programme which saw it build new cable networks and buy up other cable companies operating in the UK.

Barclay Knapp: 'Operationally this is a strong business'

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

The eventual deal is expected to see NTL bondholders having their debt converted into equity - giving them a substantial chunk of the restructured business.

"Our major focus now is fixing our balance sheet, which is encumbered with a high level of debt relative to our cash flow," Mr Knapp said in the results statement.

"Our recapitalisation process is underway and making progress," he added.

"We are in the midst of a constructive dialogue with our bondholders, bank group and potential investors."

No guarantee

But the company went on to warn that it could face a cash crisis before any deal was struck.

"There are various uncertainties with respect to this (debt restructuring) process, such as our ability to maintain adequate liquidity to complete the process and our ability to obtain the agreement of our creditors," NTL said in a statement.

It added that while it was in talks with possible investors about raising extra money, there was no guarantee they would get it.

"There can be no assurance that we will successfully complete a recapitalisation or financing in a timely manner in order to sustain the company's operations."

'Rapid progress'

But in a conference call with journalists after the release of the results, NTL's chief financial officer John Gregg sounded a more optimistic note.

He said the company aimed to reach an agreement with its bondholders, banks and shareholders "circa the third quarter this year".

"We are at the end of the tunnel and we can see the light at the end of it," he said.

And Mr Knapp spoke of "substantial and rapid progress" towards solving the debt problem.

"We want to permanently remove the 'debt-laden' that habitually appears before the NTL name."

Smaller workforce

NTL said earnings before interest, tax, depreciation and amortisation (ebitda) rose to £492m during 2001, up from £229m the previous year.

Overall it posted a net loss of £11.1bn ($15.86bn) which included an £8bn charge to cover asset write-downs and redundancy costs.

NTL has slashed jobs in attempt to save money, reducing its workforce by 6,500 to about 13,600.

The company also said that it now led the UK market for broadband services with more than 180,000 customers.

"Operationally this is a strong business," Mr Knapp said in the results statement.

"The board and management are taking every possible step to preserve the value of the enterprise to our key constituents."