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Thursday, 2 May, 2002, 15:54 GMT 16:54 UK
NTL to file for bankruptcy
ntl graphic
NTL's spending on building its network drove it deep into debt
Cable company NTL is set to file for bankruptcy protection, after winning approval from banks for a rescue deal which will hand control of the firm to bondholders.

The operations of the firm, the UK's largest cable TV company, will be "unaffected" by the bankruptcy procedure, the company said, meaning that subscribers will continue to receive normal services.

Barclay Knapp, president and chief executive, NTL
Barclay Knapp: "Very pleased"
The deal, which involves exchanging $10.6bn of debt for shares in the firm, amounts to one of the biggest defaults in corporate history.

NTL said it would by Monday file for Chapter 11 bankruptcy, which will protect it from creditors while a restructuring programme, involving the company's division into two firms, is completed.

"We expect to emerge late this summer with a strong balance sheet and committed funding which is more than adequate to meet our business plan and any contingencies," NTL chief executive Barclay Knapp said.

Key talks

The announcement follows months of speculation over the future of NTL which, while widely deemed a potentially promising company, was threatened by its debt burden.

The firm three weeks ago sealed a deal with major bondholders to swap their debt for NTL shares, and inject a further $500m into the firm.

NTL, supported by a 30-day interest payment holiday agreed with bondholders, then sought agreement with banks.

The support of banks, and major investors including France Telecom, will allow the firm to progress a restructuring set for "final consummation" by the end of September, Mr Knapp said.

Stock rejig

The deal will see NTL split into a UK/Ireland firm, initially owned 100% by current bondholders, and a Europe-focused company 86.5% bondholder controlled.

It looks like all the parties are singing off the same hymn sheet and are broadly agreed on the terms of the restructuring

Chavan Bhogaita, Bear Stearns

Shareholders including France Telecom will own the balance of shares in the European firm, and the right to buy a holding in NTL UK and Ireland.

"Our plan will achieve virtually all the objectives we set for ourselves in January," Mr Knapp said.

"Although there is still work to do to implement the agreed upon plan, we are optimistic we will be able to complete the recapitalisation in an expeditious manner."

A separate deal announced on Thursday has secured "continued funding" for Cablecom, NTL's Swiss subsidiary, which had looked close to bankruptcy.

City reaction

The deal was welcomed as encouraging by City analysts.

"It looks like all the parties are singing off the same hymn sheet and are broadly agreed on the terms of the restructuring," said Chavan Bhogaita, credit analyst at Bear Stearns in London.

Shares in NTL, which once hit $136, rose by 3 cents to 12 cents.

The announcement also helped revive flagging spirits elsewhere in the media sector, hit by the closure of ITV Digital and the axing of 1,500 jobs at UK cable firm Telewest.

In the City, shares in Reuters, which fell to among their lowest levels for 3.5 years in morning trade, closed up 1.5p at 475p on Thursday

Telewest shares recovered to close down 0.25p at 10.25p, having earlier hit 9.25p.

See also:

02 May 02 | Business
Can cable deliver?
02 May 02 | Business
Telewest to cut 1,500 jobs
30 Apr 02 | Business
NTL seeks 11th hour bank support
16 Apr 02 | Business
NTL strikes deal with creditors
08 Apr 02 | Business
NTL 'close to debt deal'
03 Apr 02 | Business
Hard-bitten NTL struggles to survive
01 Apr 02 | Business
Bondholders give NTL breathing space
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