Troubled U.K. cable- and telecommunications-service provider NTL Inc. said it
has reached an agreement with its bondholders in a deal that will split the
company in two and result in a later Chapter 11 bankruptcy filing.
NTL has been pressured for months to pare down its $17 billion in debt, and
it announced a deal Tuesday that will retire $10.6 billion in bond debt in
exchange for equity control in the company.
According to a press release, NTL said it would split into two companies --
NTL U.K. and Ireland, and NTL Euroco. NTL's current bondholders would own 100
percent of NTL U.K. and Ireland and about 86.5 percent of NTL Euroco.
Bondholders will also provide about $500 million in new financing to the U.K.
and Ireland operations.
Shareholders -- including France Telecom, which owns an 18 percent stake in
NTL -- would also receive the right to acquire shares in the two new
NTL is the largest cable operator in the United Kingdom, with about 3 million
subscribers. In Ireland, the company has about 370,000 cable customers.
NTL's other European operations are in Switzerland, Germany, France and
Sweden, with about 3.8 million customers.
To facilitate the debt-to-equity conversion, NTL said it would file a
prepackaged Chapter 11 bankruptcy in the United States -- its headquarters -- at
a later date.
'We are currently working with all parties in our capital structure,
including the company's bank lenders, to finalize these arrangements,' NTL CEO
Barclay Knapp said in a prepared statement.
'The U.S.-based Chapter 11 process will allow NTL to reorganize and re-emerge
stronger and healthier and without affecting operations,' he added.
NTL stock was up 6 cents, or nearly 65 percent, to 16 cents per share in
early trading Tuesday.