Heavily indebted British cable group NTL has agreed with bondholders to swap $10.6 billion in debt for equity in a refinancing that could be one of the world's biggest ever corporate bond defaults.
The debt-for-shares swap, aimed at slashing $17 billion of bond and bank debt, will involve NTL and its non-operating subsidiaries filing for US Chapter 11 bankruptcy, leaving its operating subsidiaries free to continue to do business.
The deal will produce $800 million in annual interest savings and includes a $500-million cash injection from bondholders.
NTL will be split into NTL UK and Ireland NTL Euroco, which includes its continental European interests.
A default on all $10.6 billion of the bonds would eclipse even the record $9.9 billion default of collapsed energy trading giant Enron.
Brian Moore, MD of NTL Ireland, said that today's announcement is very good news. 'It signals that we are closer to concluding our recapitalsation programme which is designed to reduce our corporate debt level and strengthen our financial position'.
He emphasised that NTL's operation in Ireland remains unaffected by today's announcement and that it is very much business as usual here.
'Our business operation in Ireland is both strong and growing and we will continue to work hard to meet and exceed our customers expectations. We have had a very successful 2001 and our results announced recently highlighted the strong level of growth being achieved by NTL Ireland with EBITDA rising over 25%,' he said.
'Our focus this year is to continue our rapid deployment of digital television, to widen the distribution of our broadband cable modem service and to improve our customer service,' Moore concluded.
