UnitedGlobalCom Eyes Argentine Systems

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Buenos Aires, Argentina -- Top-level executives fromUnitedGlobalCom are expected to arrive here this week to discuss the purchase of cablesystems owned by Argentina's Supercanal Holding S.A., according to Jim Clark, theDenver-based company's vice president of regional operations.

Although private negotiations between Argentina's No. 3 MSOand the global cable giant have been taking place since April, no formal offer for thecompany has been made, added Clark, who will be part of the delegation.

"Supercanal could offer an exciting opportunity todevelop broadband services, but whether a deal materializes depends on a number ofinterests," he said.

An eventual deal would continue UGC's global expansion andsecure the company a greater foothold in Latin America.

Its largest investment in the region is in Chile, where itowns leading MSO VTR Hipercable, with some 400,000 subscribers. Supercanal, with about410,000 subscribers, controls a decent chunk of Argentina's 5 million-plus-subscribercable market.

While Supercanal's assets might be an attractive play toany international cable buyer, the company's long-standing financial crisis has been knownto discourage more than a few potential bidders.

Since defaulting earlier this year on an $18 millioninterest payment on $300 million in unsecured bonds, the list of white-knight investorsthat could keep Supercanal on par with market leaders Multicanal and CableVisión hasdwindled.

Supercanal general manager Mariano Lucero confirmed thatUGC is the only firm candidate interested in a strategic investment. He declined tocomment further on the nature of the talks, adding only that no concrete offer had beenmade for the company yet.

The Argentine MSO could be worth about $800 to $900 persubscriber, or up to $369 million, according to one New York-based bond analyst.

Supercanal -- which has much smaller cable assets in threeother Latin American markets and Spain -- faces an arduous restructuring process withbondholders and creditors, to whom it owes another $104 million.

According to bond-rating agency Fitch IBCA directorAugustine Okwu, negotiations with lenders are stalled pending the liquidation of thecompany's assets.

Already wanting out are lead investor Grupo Uno, owned byArgentina's Vila family, which controls 51.5 percent, as well as minority shareholderLatlink, a property of the Cuban-American Mas Canosa family.

Multicanal, Supercanal's other main investor, has beensilent on the issue. The MSO, owned by local media conglomerate Grupo Clarín, declined tocomment on Supercanal's troubles despite speculation that it would be forced to increaseits 20 percent stake in the company, rather than letting it fall into bankruptcy.

Commenting on Supercanal's financial difficulties, Clarksaid, "It's a complex situation, but hopefully, we'll emerge as a catalyst to solve[Supercanal's] problems."

A deal would join both companies for a second time. In1997, Denver-based UGC, previously known as United International Holdings Inc., sold itsArgentine operations to Supercanal for $225 million.

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