The refinancing and debt reduction plans of telecommunications company NTL are thought to be progressing well, with details of a structure set to be announced within weeks, according to a report on today’s Financial Times website.
NTL has appointed Credit Suisse First Boston, JPMorgan and Morgan Stanley to advise on a recapitalisation structure and reduction of its $12 billion (£8.3 billion) debt burden. The group has maintained that it will be cash flow positive until 2004.
The FT reports insiders as saying that a decision to default on a $96 million (£66.7 billion) bond payment is a sign that the refinancing is progressing well.
However, there is still a possibility that the broadband group could file for bankruptcy protection within the next week. This would result from offering bondholders new shares in return for writing off around £8 billion of the company’s debt.
The Chapter 11 bankruptcy, as it is known, would effectively be temporary and would provide NTL with three months’ breathing space in which it could finalise the refinancing, whilst enjoying protection from its creditors. The company would then attempt to re-list the shares.
The New York Stock Exchange has stop trading NTL shares due to severe falls in value. NTL is hoping that shares will begin trading again imminently.
Whilst reports claim that NTL is progressing well with its financial plans, it is nevertheless on the brink of running out of cash; last week its results showed an £11 billion loss for the year ended 31 December 2001. The company is seemingly by no means out of the woods.
Given ITV Digital’s demise, NTL’s 3 million broadband television homes and 11 million potential homes are crucial in the Government’s plans to develop high-speed internet access in the UK, not to mention meeting its targets for the uptake of digital television.
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