The life-saving debt-for-equity swap was agreed with an unofficial committee of public bondholders and comes after NTL defaulted on paying $96m of interest payments due on some US bonds on 1 April.
Under the deal, NTL will split into two – NTL UK and Ireland, holding all of its UK and Ireland assets, and NTL Euroco, holding certain of its continental European and other assets.
The company will be fully funded with debt reduction to produce over $800m annual interest savings.
In the US, NTL will file for Chapter 11 bankruptcy protection to implement the recapitalisation – after which bondholders will own over 50% of the face value of NTL and its subsidiaries’ public bonds.
NTL said that ‘operations will continue uninterrupted, customer service will be unaffected, suppliers will be paid in the ordinary course, and NTL’s management will remain in place.’
During the Chapter 11 process some bondholders will provide up to $500m of new financing to NTL’s UK and Ireland operations to ensure the business operations have access to sufficient liquidity to continue ordinary operations.
‘The agreement in principle we are announcing today is a major step towards our goal of ensuring the successful completion of the recapitalisation that NTL announced in January,’ said president and chief executive Barclay Knapp.
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