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For weeks the media has speculated on what shape NTL's recapitalsation plan will take and on Tuesday the company released the details of the life-saving strategy that will not only drastically reduce its debt, but also divide it.
NTL says it agreed in principle to a plan to convert USD10.6 billion of its debt into equity for bondholders. An unofficial committee of public bondholders will also provide USD500 million in new financing which NTL says will leave the firm fully financed. In total, the plan will produce over USD800 million in annual interest savings, NTL said.
The financial manoeuvres will see the bank debt remain in place, but will dramatically cut the USD17 billion that NTL owes to creditors. The company's non-operating subsidiaries will also file for US Chapter 11 bankruptcy under the proposal.
Another aspect of the scheme will divide NTL in two, creating one company called NTL UK and Ireland, and a second company called NTL Euroco, which will hold certain continental European and other assets which NTL unsuccessfully tried to sell last year.
Under the complicated plan, bondholders will own all of NTL UK and Ireland, and 86.5 percent of NTL Euroco. This means that shareholders, who have seen the value of this stock plummet from a high of USD38 per share last year to USD0.07 currently, will own a mere 13.5 percent of the less valuable NTL Euroco.
However shareholders will be given rights to eventually buy 32.5 percent of NTL UK and Ireland. France Telecom, currently NTL's largest shareholder, may also receive NTL's 27.7 percent stake in France's Suez-controlled cable operator Noos.
At this point the deal remains dependant on approval from banks, but NTL chief executive Barclay Knapp said he expected to complete the process by August or September. Other questions about how the deal will unfold remain, including whether Knapp himself, a co-founder of the company, will remain at the helm.
For now, Knapp said he was cautiously optimistic about the company's future and claimed that NTL will "re-emerge stronger and healthier and without affecting operations."
Meanwhile, the firm's Irish managing director Brian Moore hailed the announcement as good news for the business. "I would like to emphasise that NTL's operation in Ireland remains unaffected by today's announcement and that it is very much business as usual here. Our business operation in Ireland is both strong and growing," Moore said.
He went on to say that in 2001 the company had a 25 percent rise in EBITDA and for the upcoming year the company would continue to roll out digital television in the Republic and hoped to widen its distribution of its broadband cable modem service.
NTL employs around 13,000 workers, mostly in the UK, but 500 of its employees are located in Ireland.
More information is at the NTL Web site.
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