UPC Slashes Its Debt

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Almost three months after it first attempted to restructure its bonds,
United Pan-European Communications N.V. (UPC), the Dutch cable subsidiary of
UnitedGlobalCom Inc., has worked out a deal that will reduce its debt from $10.5
billion to $3.4 billion by the first quarter of next year.

UPC, which has about 7.2 million basic-cable subscribers in Europe, said
Monday that it has reached an agreement with bondholders to exchange their debt
for about 32.5 percent equity in UPC.

UGC, which is 75 percent owned by Liberty Media
Corp., will retain 65.5 percent of UPC stock.

Shareholders of preferred, common and priority shares will receive about 2
percent of the outstanding stock.

UPC has also restructured its bank facility, with its major lenders granting
a waiver on its defaults on paying interest on its debt until March 31,
2003.

In addition, the banks have agreed to reduce a $4 billion loan commitment to
$3.5 billion and to ease certain covenants regarding UPC's cash flow-to-total
cash interest and cash flow-to-senior debt service ratios.

UGC first proposed the debt-for-equity swap back in July, but its troubles
reach further back. In October 2001, Liberty proposed buying about $1.58 billion of the bonds
in a modified Dutch auction, but it later withdrew the offer.

The difficulties in reaching a deal were not lost on UGC executives.

'None of us expected it to take this long,' UGC chairman Gene Schneider said
on a conference call with analysts. 'But your patience is going to pay back in a
big way.'

In order to facilitate the restructuring, UPC NV, the financial holding
company for UPC assets, will file a prepackaged Chapter 11 bankruptcy petition
in both the United States. and the Netherlands. UPC expects to emerge from
Chapter 11 by the end of the first quarter of 2003.

UGC has also agreed to underwrite up to $98.8 million in additional funding
through the issuance of new stock after the restructuring is completed.

The changes will fully fund UPC to operating free cash flow, expected to be
$209 million by the end of 2003. Operating free cash flow is earnings after
capital expenditures are made.

UGC stock rose more than 37 percent, or 48 cents each, on the news to $1.75
per share in afternoon trading Monday.

Trading in UPC shares was suspended on the Euronext
exchange in Amsterdam all day Monday. The stock had traded at about 5 cents per
share Sept. 27.

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