Telewest Banks Clear Deck for Debt-Equity Exchange

26 August 2002

Telewest, the debt-beset US cable business whose operations are primarily within the UK, got a thumbs-up from its banks late last week to start negotiations with its bondholders.

Britain's second largest cable operator (after fellow US rival NTL), was let off the hook by no fewer than twenty-six debtor banks to which it owes £1.8 billion ($2.73bn; €2.82bn). It is now free to initiate debt-for-equity exchange negotiations with its bondholders, prominent among which is John Malone’s Liberty Media – the US media giant with a finger in just about every European cable pie.

Malone owns around 9% of Telewest’s bonds plus a 25% equity stake, a Boston Crab-like hold which ensures (as Telewest’s newly appointed managing director Charles Burdick judiciously observes) that Liberty will “always have a last look” at any restructuring decision.

Industry observers along with senior executives of both cable groups have long acknowledged the probability of merger between Telewest and NTL.

If this comes to pass, Britain's entire cable and satellite TV industry (including NewsCorp-controlled BSkyB) will be US-owned – a situation predicted and feared both by politicians and business leaders back in the early 90s when British Telecom was barred by the government of the day from moving into the cable entertainment business.

The lawmakers' purported reason? It could stifle the nascent competition.

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