According to an unconfirmed report in Friday’s New York Times (via Bloomberg News), the UK’s second largest cable network Telewest has agreed to the terms laid down by its bankers for a lifesaving £2 billion ($3.09bn; €3.11bn) loan.
If the deal is confirmed, it secures the medium term future for the US-owned network which has yet to turn a profit. Around thirty banks are involved, eight of which have agreed the terms of the deal which have now been sent for ratification to the 22 other financial institutions involved. Approval from all banks is expected by mid-December.
Telewest, like its larger rival NTL (also US-owned) incurred massive debts through the 90s in building its cable infrastructure and acquiring rivals. While both companies continued to rack-up development costs, the expense of servicing these colossal debts was not covered by income growth.
Subscription income, especially in the cable TV sector, has been stunted by the aggressive tactics of Rupert Murdoch’s UK satellite operation BSkyB, which now claims seven million subscribing households as opposed to Telewest’s 1.75m and NTL’s 2.65m.
There has been much speculation about the merger of the ailing cable duo – a course openly favoured by Telewest – which was finally laid to rest earlier this month when NTL ceo Barclay Knapp, having finally secured a debt-for-equity swap whilst under the protection of America’s Chapter 11 bankruptcy law, gave it the thumbs-down [WAMN: 19-Nov-02].
Data sourced from: New York Times / Bloomberg News; additional content by WARC staff