Liberty to increase stake in debt-laden Telewest

Liberty Media Corporation have announced their intention to buy out 20% of Telewest Communications, the UK's second largest cable TV provider, should the heavily indebted broadcaster pursue plans for a bonds-for-equity swap.
The move is dependent on shareholders and investors accepting a proposal from Telewest management for bonds to be issued to creditors to cover debts.
The company is in financial straits, an ntl in miniature, which has seen debts rise to a massive £5.3 billion. Liberty Media Corp, which already holds 25% of Telewest equity, announced at the end of trading on Wednesday that it would be prepared to buy bonds worth a further 20% when issued to investors – and at a bonus rate if completed before June 26. The tender – managed by Lehman Brothers – will run until July 11.
The move will be seen by many as an attempt by John Malone, the billionaire owner of Liberty, to solidify his influence at the stricken cable operator, as the take up of bonds by a variety of creditors could dilute the strength of his current stake.
The extra 20% bundle sought by Liberty is reported to be valued at around £350 million and is a significant commitment by Liberty which has seen the value of their stake in Telewest slide by around 90% in the past year.
Mr Malone is known to be keen to maintain a sizable presence in the cable market, and he recently failed in his bid to acquire similar bonds in a debt-for-equity swap issued by ntl. In that instance, ntl managed a £10 billion debt through its bondholders. Elsewhere, Liberty gained a blocking minority at UPC, the Amsterdam-based cable company, which has allowed Liberty to lead that debt restructuring.
A controlling minority stake in Telewest could yet net Mr Malone a slice of ntl as it has been rumoured that both cable companies will merge should they be successful in their respective recapitalisation programmes.
Telewest has seen losses for the past 25 consecutive quarterly reports and, from share prices over the past couple of days, the company is estimated to be worth in the region of £140 million.
Telewest Communications, www.telewest.co.uk
Liberty Media Corporation, www.libertymedia.com
(GMcG)