Goldman Sachs Warning Could Drive NTL to Slash 'n' Burn Costcutting

14 December 2001

Britain's largest cable operator, US-owned NTL, has moved to allay investors’ fears that it will exhaust its cash reserves within six months.

These were triggered by corporate punter Goldman Sachs' unprecedented prediction that NTL’s piggybank will be empty by the second quarter of 2002. Goldman’s intervention, insiders fear, will drive the beleaguered group into slash ‘n’ burn tactics to decimate costs and halt investment.

Debt-beset NTL must convince creditors and entrail-rakers alike that it can meet the draconian earnings targets set by its bank covenants. These require that it remains within agreed ratios of debt to EBITDA (earnings before interest, tax depreciation and amortization). Failure to do so could result in foreclosure, bringing about the fall of the group with aggregated debts of $20 billion in bonds, bank debt and preferred stock.

NTL said it noted “with disappointment [the] published opinions of Goldman Sachs”. Those on the sidelines wonder what other agenda may have motivated the wily bettor to publicly trumpet its thoughts at this particular moment?

News source: Financial Times