NTL Announces Intention to Refinance GBP 1.8 Billion Bridge Loan with Favorable Financing Structure; Approximate GBP 30 to GBP
May 23 2006 - 7:53AM
Business Wire
NTL Incorporated (NASDAQ: NTLI) today announced its intention to
refinance its GBP 1.8 billion bridge facility with an alternative
financing structure involving new indebtedness of its UK group. The
bridge facility was incurred in connection with NTL's reverse
acquisition of Telewest, which closed on 3 March 2006. NTL
anticipates that the bridge facility will be refinanced through an
additional tranche of senior debt of its subsidiary, NTL Investment
Holdings Limited, and a bond offering by its subsidiary, NTL Cable
plc. The new bonds would rank on a pari passu basis with NTL's
existing bond indebtedness. NTL expects this refinancing to take
place within the next thirty to sixty days. NTL estimates that the
alternative financing structure will permit it to reduce its annual
financing cost by GBP 30 million to GBP 35 million per year. More
importantly, the resulting capital structure will facilitate an
efficient future deleveraging of the company at a U.K. group level.
NTL had been seeking an Internal Revenue Service, or IRS, ruling to
confirm that the group internal restructuring associated with the
transaction does not give rise to U.S. federal income tax. After
several meetings between representatives of the IRS and NTL's tax
advisers, NTL has determined to proceed to implement this internal
restructuring on the basis of advice from its tax advisers and has
withdrawn its ruling request. The tax advisers have indicated to
NTL that the transaction should not give rise to U.S. federal
income tax. While NTL believes that the IRS should agree with the
analysis and conclusions of its tax advisers, if the IRS were to
disagree, and, if litigated, NTL's position was not sustained in
court, NTL could potentially be subject to tax of 0% up to 35% of
the amount so refinanced, plus interest, based on treating the
transaction as giving rise to a deemed distribution. Such tax would
depend upon the earnings and profits and tax basis of the companies
involved in the restructuring. However, NTL believes that the
likelihood of a highly adverse result is low and, in the event that
NTL's views were challenged, it would defend its position
vigorously. NTL does not anticipate showing a contingency reserve
on its financial statements in respect of this matter. This
decision only affects the taxation of NTL Incorporated, and in no
event will the transaction be taxable to NTL's existing or future
debt holders or stockholders. About ntl Incorporated (NASDAQ: NTLI)
-- On 3 March 2006 ntl Incorporated completed a merger with
Telewest Global, Inc. creating the UK's largest provider of
residential broadband and the UK's leading provider of triple play
services. The company operates under the name of ntl Incorporated.
-- ntl offers a wide range of communications and entertainment
services to more than 5 million residential customers. ntl's
networks can service more than 12 million homes - 50% of UK
households - and 85% of UK businesses. -- ntl's content division,
Flextech Television provides television channels for the UK
multichannel TV market and owns transactional channels price-drop
TV, bid tv, speed auction tv and screenshop. Flextech owns 6
entertainment channels - LIVINGtv, LIVINGtv 2, Bravo, Challenge,
Trouble, Ftn (plus their time shifted variants) and is a 50%
partner in UKTV which consists of ten channels including UKTV Gold,
UKTV Drama and UKTV History. Together Flextech and UKTV are the
largest supplier of basic channels to the UK pay-TV market. --
Further information about ntl and its products can be found at
www.ntl.com, www.telewest.co.uk or www.flextech.co.uk Safe Harbor"
Statement under the Private Securities Litigation Reform Act of
1995: Various statements contained in this announcement constitute
"forward-looking statements" as that term is defined under the
Private Securities Litigation Reform Act of 1995. Words like
"believe," "anticipate," "should," "intend," "plan," "will,"
"expects," "estimates," "projects," "positioned," "strategy," and
similar expressions identify these forward-looking statements,
which involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or
achievements or industry results to be materially different from
those contemplated, projected, forecasted, estimated or budgeted,
whether expressed or implied, by these forward-looking statements.
These factors include: (1) the failure to obtain and retain
expected synergies from the merger with Telewest and the proposed
transaction with Virgin Mobile; (2) rates of success in executing,
managing and integrating key acquisitions, including the merger
with Telewest and the proposed transaction with Virgin Mobile; (3)
the ability to achieve business plans for the combined company; (4)
the ability to manage and maintain key customer relationships; (5)
the ability to fund debt service obligations through operating cash
flow; (6) the ability to obtain additional financing in the future
and react to competitive and technological changes; (7) the ability
to comply with restrictive covenants in NTL's indebtedness
agreements; (8) the ability to control customer churn; (9) the
ability to compete with a range of other communications and content
providers; (10) the effect of technological changes on NTL's
businesses; (11) the functionality or market acceptance of new
products that NTL may introduce; (12) possible losses in revenues
due to systems failures; (13) the ability to maintain and upgrade
NTL's networks in a cost-effective and timely manner; (14) the
reliance on single-source suppliers for some equipment and
software; (15) the ability to provide attractive programming at a
reasonable cost; and (16) the extent to which NTL's future earnings
will be sufficient to cover its fixed charges. These and other
factors are discussed in more detail under "Risk Factors" and
elsewhere in NTL's Form 10-K and NTL Holdings Inc.'s Form 10-K that
were filed with the SEC on February 28, 2006 and March 1, 2006,
respectively. We assume no obligation to update our forward-looking
statements to reflect actual results, changes in assumptions or
changes in factors affecting these statements.
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