Malone Strengthens Hold Over Euro Cable Firm

21 August 2003

US media entrepreneur John Malone is to strengthen his hold over UnitedGlobalCom, parent of European cable operator United Pan-Europe Communications.

UGC’s founders, among them chairman Gene Schneider, have agreed to exchange their 8.2 million class B shares for a stake in Malone’s investment vehicle Liberty Media.

The deal will lift Liberty’s holding in UGC to 75%, including 96% voting rights. It terminates a three-year-old agreement between Malone and Schneider whereby Liberty took a minority stake in UGC but promised to vote with the chairman for ten years.

Malone’s majority holding in the company will shortly hand him control of UPC, which has nearly completed a mammoth debt-for-equity swap that will leave UGC with a 65.5% stake.

In addition, some observers believe the UGC deal is a sign Liberty is losing interest in the auction of Vivendi Universal’s US assets. Although the exchange involves only stock, it requires Liberty to take around $4 billion (€3.6bn; £2.5bn) of UGC debt onto its balance sheet, reducing its flexibility in the Vivendi auction.

Data sourced from: Financial Times; additional content by WARC staff