NTL files for bankruptcy

NTL plans to restructure its operations

The UK's biggest cable TV operator NTL has filed for bankruptcy protection as part of a plan to put the debt-ridden company back on a sound financial footing.

NTL's bankruptcy, which was widely expected following an announcement from the company last week, is not expected to affect its service to subscribers.

According to documents submitted to a bankruptcy court in New York, where NTL is based, the company has $16.8bn (£12bn) in assets and debts amounting to $23.4bn.

NTL borrowed heavily to fund an acquisition spree during the late 1990s, but has been struggling to pay the cost of servicing its debts in recent months.

Default

NTL's financial overhaul began last month, when a group of major NTL creditors agreed to swap $10.6bn of debt for a controlling stake in the company.

The swap, which amounted to one of the biggest ever corporate defaults, relieved some of the company's crippling debt burden.

Wednesday's bankruptcy filing is designed to protect the company from its remaining creditors while it presses ahead with a restructuring plan.

This will involve splitting the company into two firms, one focused on the UK and Ireland, and the other taking over NTL's operations on mainland Europe.

The company, which provides cable TV and telecommunication services, has said it expects the restructuring process to be complete by September this year.

Broadcast woes

The shake-up at NTL follows the collapse last week of British digital terrestrial broadcaster ITV Digital.

But the willingness of NTL's creditors to strike a deal reflects the view that, unlike ITV Digital, the cable broadcaster's business model is fundamentally sound.

NTL's subscriber numbers have risen steadily to about 2.8 million, whereas ITV Digital's stalled at about 1.2 million.