Telewest Defies Bondholder Threats to Block Restructuring

30 May 2003

Cable operator Telewest intends to proceed with its massive financial restructuring despite threats from a leading investor to block the process.

The group – US-owned but operating chiefly in the UK – is undergoing a £3.5 billion ($5.8bn; €4.9bn) overhaul that will erase its mountainous debt burden and hand bondholders control of the company.

It is reportedly determined to present the final scheme to Britain’s High Court in early June, in defiance of opposition from one of its biggest bondholders, Bill Huff.

Huff runs US hedge fund W R Huff Asset Management. He claims to control 20% of Telewest’s bond notes, though this figure cannot be verified, and has held up the restructuring process for several weeks with numerous objections.

To succeed, the plan requires 75% support of each class of investors (classes being determined by value). By proceeding, Telewest is banking on Huff either dropping his opposition or being outgunned by other bondholders. It also suspects Huff’s claim to control 20% is exaggerated.

Huff’s motives are unclear. Some observers suspect he is angling to become the biggest single investor in the restructured firm. There is a further twist in that he has already achieved this feat at rival NTL, the UK’s biggest cable company, where he sits on the board as the largest shareholder after a similar debt-for-equity swap. The two firms are often touted as candidates for a merger – a move that would no doubt suit Huff’s hedge fund.

Data sourced from: Times Online (UK); additional content by WARC staff