Troubled U.K. cable group NTL filed for bankruptcy Wednesday and launched the financial revamp approved last week by most of its lending banks, bondholders and preferred stockholders.
In the recapitalization, $10.6 billion in debt will be converted into equity in two newly structured companies, NTL UK and Ireland and NTL Euroco.
A group of bondholders has committed $500 million in fresh financing for NTL UK pending court approval to help fund operations going forward. NTL has about 3 million subscribers and has promised customers and creditors that it’s operating business as usual.
The company, one of Europe’s biggest cablers, is based in the U.S. and has plenty of investors Stateside. It filed for Chapter 11 in Manhattan.
NLT buckled after racking up nearly $24 billion in debt and crippling interest payments as a result of a prolonged spending spree. Its financial woes have fueled rumors of a possible merger with rival Telewest, which is owned in part by Liberty Media’s John Malone.
NTL said the restructuring calls for bondholders to receive 100% of the initial equity of NTL UK and 87% of the initial equity of NTL Euroco. Preferred and common stockholders, including major shareholder France Telecom, will get a package of rights and warrants entitling them to buy NTL UK shares. Preferred shareholders will wind up owning 24% of the new company, and holders of common stock — who always get shafted in bankruptcy proceedings — will own 8.9%.
NTL shares fell more than 4% to about 11¢ in New York Wednesday. Now a penny stock, NTL was trading at about $30 a year ago.