Telewest AGM Ousts Liberty Media Non-Exec Directors

13 June 2002

John Malone will not take this kindly.

The buccaneering cable entrepreneur, with a 25% stake the largest shareholder in sinking British cable giant Telewest (through his investment vehicle Liberty Media), may or may not have bought Telewest bonds – and his two nominated directors resolutely refused to answer questions on the subject at the company’s annual general meeting this week.

Angered by the refusal, other shareholders reacted by successfully voting against the reappointment of Malone’s non-executive nominees. Nor were they over the moon when chief executive Adam Singer refused to deny the possibility that the group could be forced into a debt-for-equity swap.

The aggrieved meeting also remained unappeased by the advocacy of Liberty Media International president Miranda Curtis, who defended Telewest executives from accusations of trough-truffling, having awarded themselves £690,000 ($1.01 million; €1.07m) in bonuses last year despite the total absence of profit and a 40% dive in Telewest’s share price [WAMN: 14-May-02].

Curtis, until the vote a non-executive, director of the group, also sat on its remuneration committee. She told the meeting: “It is not in the interest of shareholders now to lose key members of what is generally regarded as the best management in this company.”

But the meeting was not impressed: especially stony-faced were representatives of investor pressure group PIRC and the National Association of Pension Funds.

Telewest chairman Cob Stenham shunted the meeting’s attention away from such unpalatable matters, telling shareholders that the long-rumoured marriage with rival cable operator NTL would happen “sooner or later”.

“We’ve always said we see a great deal of industrial merit in a merger and NTL have said the same,” he said. “In fact, most people have also drawn that same conclusion.”

Thursday 14-Jun-02, 08.45 BST

John Malone’s investment vehicle Liberty Media moved last night (Wednesday) to safeguard its 25% equity stake in Telewest by bidding cash for upward of 20% of the cable operator's bonds.

Malone’s play anticipates a likely debt-for-equity swap along similar lines to that of UK rival NTL. But the management of Telewest is reportedly surprised at the speed and timing of the bid, which if successful could hand Liberty a blocking minority if the expected bond-for-equity scenario materializes within the next year.

“Opportunistic” is the word used by US analysts of Liberty’s tender, which is priced at around 44% of the bonds’ face value. Its timing, they believe, is activated by the bond-price plummet of stateside cable companies such as Adelphia and Chartered. “It's a low ball,” said one entrail-raker. “US cable investors are being hit so badly that they might take it [the Liberty offer] because it is the only bid out there.”

Despite a fall of over 90% in the value of its 25% equity stake during the past six months, Liberty is understood to be committed to the future development of Telewest.

Stop Press data sourced from: Financial Times; additional content by WARC staff

Data sourced from multiple publications; additional content by WARC staff