Vendor Financing Dries Up for NTL; Questions Asked About $15m Payment to Ailing Associate

24 December 2001

Debt-beset Anglo/US cable operator NTL, Britain's largest, revealed Friday it has been unsuccessful in obtaining new vendor financing – which senior management had hoped would serve as a tourniquet to stem its current cash haemorrhage.

At present the group has around $250 million of vendor finance, courtesy of telecoms equipment suppliers Cisco Systems and Nortel, underwritten by the Export Development Corporation of Canada. NTL had hoped to strike similar deals with suppliers of digital set-top boxes and other services –without success thus far.

Last month NTL chief executive Barclay Knapp voiced his optimism about vendor financing for boxes and information technology. However, Knapp’s sanguinity was not shared by Standard and Poor's and Moodys, both of which downgraded NTL’s credit rating.

The group is also reeling from the unprecedented prediction by corporate punter Goldman Sachs that its piggybank will be empty by the second quarter of 2002 [WAMN: 14-Dec-01].

To add to NTL’s woes, pointed questions have been asked about its $15 million cash injection last year into CoreComm, a struggling US telephony and internet operation that shares a chairman, ceo, and three directors with NTL.

NTL conceded there was a potential conflict of interest in the payment to CoreComm which – like NTL – is chaired by George Blumenthal with Knapp as chief executive. The latter also holds stock in and receives payment from CoreComm.

Separately, BT is said to be getting increasingly twitchy about its possible exposure to NTL for up to £50m in unpaid interconnect fees – owed to BT for carrying NTL customer calls via its network.

News source: Financial Times