A move by Liberty Media Corp to gain control of UK cable operator Telewest Communications Plc by buying a chunk of the company's bonds has hit a snag. A group of bondholders is taking legal action, claiming the move was illegal.

Though Liberty denied the allegation, and said its offer complied with security laws, it extended the expiry date of the offer from July 11 to July 19 and allowed those bondholders who have accepted its bid to change their minds at any time up to the expiry date.

With 48.8% of the Telewest equity under its control and up to 20% of the company's bonds, Liberty is putting itself in a position to win control when the company engages in a debt-for-equity swap to cut its huge interest burden. But as this circumvents the rules governing conventional take-overs, legal action was only to be expected.

Once in control of Telewest, Liberty's next move is expected to be to merge the company with the other UK cable operation NTL Inc, which is undergoing a debt-for-equity restructuring.

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