NTL to file for Chapter 11, split in twain

Deal beckons

NTL inc plans to file for Chapter II and split its operations into two, in a deal to rescue the cable company.

The lifeboat has been agreed by a committee of major creditors - mostly NTL bondholders, representing more than half the company's $11bn bonds debt. So it could still founder, if other bondholders disagree.

Either way, shareholder equity is torched. NTL inc. will stil

In return for writing off their debt, the bondholders will end up with 100 per cent of NTL's UK and Ireland ops - initially - and 86.5 per cent of its continental European business. NTL is splitting the two components into separate businesses, removing a big sticking point among many creditors, which expressed their unhappiness with the UK arm being saddled with the lossmaking European sub( to be called NTL Euroco. The operating businesses are not in Chapter 11 or local equivalents, and continue trading as normal.

Stage 2 in the recapitalisation will see a rights issue for the NTL UK and Ireland, Existing NTL shareholders, most notably France Telecom, will have subscription rights equivalent to $10.5bn "enterprise value", entitling them inter alia to buy up to 32.5 per cent of the business.

Shareholders will have 13 per cent of NTL Euroco, which will continue to have an unspecified amount of bonds outstanding. On completion of the recapitalisation, NTL will transfer its 27 per cent stake in Noos SA to France Telecom, in line with promises it made when the telco invested in the business.

If the recapitalisation is approved, NTL - in the UK and Ireland at least - begins to look like a company that may even be able to pay its bills. ®

NTL press release

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