NTL preps $1bn rights issue

Interest cover

UK cable company NTL is to raise more than $1 billion through a rights issue in order to cut debt.

The company, which operates in the UK and Ireland and only came out of bankruptcy earlier this year, filed papers with US Securities and Exchange Commission (SEC) which confirmed that it was seeking to raise the cash. It had been widely expected that the company would make such a move, although the actual amount of the rights issue was previously unclear.

The company said that the $1.05 billion raised through the scheme would be used to repay a loan it agreed to under the terms of its bankruptcy proceedings. Some of the money will also be paid to its $650 million working capital facility and the reminder will go towards subsidiaries and general corporate purposes, the company said.

Rights will be issued to NTL's common stockholders entitling them to subscribe for shares at a ratio to be determined later. NTL said that W.R. Huff Asset Management and Franklin Mutual Advisers have already agreed to exercise all of the rights to be distributed to them. Combined the two firms own 21.3 percent of NTL's outstanding shares.

Deutsche Bank Securities, Goldman, Sachs & Co and J.P. Morgan Securities, acting as joint lead managers, have agreed to purchase any shares that relate to unexercised rights at the completion of the rights exercise period.

The latest fundraising moves, which are said to be critical to the company's on-going restructuring, come just a few weeks after the departure of CEO Barclay Knapp. He was blamed for the firm's debt problems last year which led to the chapter 11 bankruptcy. Knapp's resignation came after the guts of the bankruptcy proceedings were completed.

However, on Friday, in SEC filings connected to the rights issue, it was revealed that the former CEO was paid $2.1 million in severance fees, or about three times his annual salary. What's more, Knapp is understood to be collecting $6,000 a day from the company in consulting fees and since his resignation has worked for five days, which would have netted him $30,000 since mid August.

The SEC filings also show that the separation agreement bound NTL and its executives from saying anything negative about Knapp as part of a "non-disparagement" clause.

© ENN

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