During the recapitalization process, NTL’s operations will continue uninterrupted, customer service will be unaffected, suppliers will be paid in the ordinary course, and NTL’s management will remain in place
NTL says it will be fully funded, with the reduction in debt to produce over $800 million in annual interest savings. The deal includes a $500 million cash injection from bondholders, which will allow the UK and Ireland operations to continue funding projects and ongoing services both while the company is being restructured and in the post-refinanced company. NTL’s bank debt and public bonds on its Diamond and Triangle operations will remain unaffected – and the company has assured that interest payments on these will continue to be met.
Commenting on the agreement, Barclay Knapp, NTL’s President and CEO said: The agreement in principle we are announcing today is a major step towards our goal of ensuring the successful completion of the recapitalization that NTL announced in January. We are currently working with all parties in our capital structure, including the company’s bank lenders, to finalize these arrangements. The US-based Chapter 11 process will allow NTL to reorganize and re-emerge stronger and healthier and without affecting operations.
Under the agreement, NTL UK and Ireland will be split away from the European operations, which will be renamed NTL Euroco. Current bondholders will, under the proposed deal, receive 100% initial equity of NTL UK and Ireland, and 86.5% of NTL Euroco. Stockholders will then be able to participate in a rights issue, priced at $10.5bn enterprise value, entitling them to purchase primary equity of NTL UK and Ireland. The company says that if stockholders fully exercised the rights, preferred stockholders would be able to acquire 23.6% of the company’s primary equity, and common stockholders 8.9%.
