Cable & Wireless Communications Plc is set to re-cycle 927m pounds of its expensive, high interest debt into $2bn of lower yield US bonds by capitalizing on its telephony-based earnings and stronger balance sheet. The move is expected to save 40m pounds a year in interest payments and this increased financial flexibility will help the company to extend the its position as market leader while its rivals continue to be hamstrung by debt. C&WC became the UK’s biggest cable company in 1996 when it merged Cable & Wireless Plc’s domestic UK telecommunications business with the cable companies Videotron, Bell Cablemedia and Nynex Cablecomms. And with the cable companies came substantial amounts of high yield debt, running at between 11% and 12% (against just 6% for US Treasury bonds) taken out to finance network construction. But with 85% of the new group’s earnings now safely derived from what was Mercury Communications Ltd, the group’s credit ratings have improved. The interest savings will bring a significant boost to C&WC’s earnings, which are expected to reach 130m pounds this year.
