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28/03/2002
NTL offer debt-for-equity deal to creditors
Cash-strapped NTL are set to offer creditors a deal which it is hoped will allow the cable company to stay afloat as it tries to reduce its £17 billion debts.
It is believed that NTL may have only £500 million operating cash left in the pot, which equates to three months liquidity as the company struggles under the weight of massive interest payments to creditors. Under the proposal, NTL will offer creditors equity in return for a reduction of debt, but the company is working against the clock as the prospect of insolvency looms.
NTL Chief Executive Barclay Knapp said that talks with the creditors had been "constructive".
He added: "Our major focus now is fixing our balance sheet, which is encumbered with a high level of debt relative to our cash flow. Our recapitalisation process is underway and making progress. We are in the midst of a constructive dialogue with our bondholders, bank group and potential investors."
Creditors will be hopeful that an extra £300 million can be raised through the sales of some of its assets in the short term. However, the debt-for-equity swap could be the key to NTL's long-term solvency and Mr Knapp will be able to point to the company's rise in underlying earnings to £492 million as a further enticement to accepting an equity deal. The profits rise was a significant improvement on the £229 million achieved in the previous financial year.
Overall NTL posted a net loss of £11.1 billion that included an £8 billion charge to cover asset write-downs and redundancy costs. To cut costs, NTL made 6,500 redundancies and the company now has about 13,600 employees.
The company ran into trouble last year during an expensive restructuring programme that involved a massive expansion in the UK.
(GMcG)
It is believed that NTL may have only £500 million operating cash left in the pot, which equates to three months liquidity as the company struggles under the weight of massive interest payments to creditors. Under the proposal, NTL will offer creditors equity in return for a reduction of debt, but the company is working against the clock as the prospect of insolvency looms.
NTL Chief Executive Barclay Knapp said that talks with the creditors had been "constructive".
He added: "Our major focus now is fixing our balance sheet, which is encumbered with a high level of debt relative to our cash flow. Our recapitalisation process is underway and making progress. We are in the midst of a constructive dialogue with our bondholders, bank group and potential investors."
Creditors will be hopeful that an extra £300 million can be raised through the sales of some of its assets in the short term. However, the debt-for-equity swap could be the key to NTL's long-term solvency and Mr Knapp will be able to point to the company's rise in underlying earnings to £492 million as a further enticement to accepting an equity deal. The profits rise was a significant improvement on the £229 million achieved in the previous financial year.
Overall NTL posted a net loss of £11.1 billion that included an £8 billion charge to cover asset write-downs and redundancy costs. To cut costs, NTL made 6,500 redundancies and the company now has about 13,600 employees.
The company ran into trouble last year during an expensive restructuring programme that involved a massive expansion in the UK.
(GMcG)
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NTL joins with Orange for new mobile phone service
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