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Ailing NTL Now Faces Delisting

U.K. telephone and cable-television service provider NTL Inc.'s troubles continued to mount last week, after the New York Stock Exchange informed the company it is in danger of being delisted.

That news came about one week after the MSO said it had hired a trio of investment bankers to help it seek alternatives for restructuring its debt.

NTL stock, which has dropped by more than 97 percent in the past six months, closed at 28 cents on Feb. 5, a new 52-week low. That's when the company said the NYSE had served notice that NTL did not meet the exchange's pricing requirements, which stipulate that listed companies must maintain a minimum share price of $1 for 30 consecutive days.

NTL stock, which had traded at more than $100 per share in January 2000, last traded above $1 on Dec. 28.

According to NYSE rules, the exchange can grant a company up to six months to comply with the listing rules. NTL said it has requested that such a time period be granted.

Compliance with those NYSE rules is just the latest of NTL's problems.

Late last month, New York-based NTL said it hired Credit Suisse First Boston Corp., Morgan Stanley Dean Witter & Co. and J.P. Morgan Chase & Co. to "advise on strategic and recapitalization alternatives to strengthen the company's balance sheet and reduce debt."

NTL president Barclay Knapp stated in the release that NTL has sufficient liquidity to meet its most pressing debt obligation, a $92 million interest payment that was due Feb. 1. But he also admitted that the company faces a difficult time.

"Although we continue to perform well, we believe we need to proactively seek ways to strengthen our balance sheet and reduce our debt," Knapp said in a prepared statement. "Consequently, we are now working with CSFB, J.P. Morgan and Morgan Stanley to make sure that we have the right capital structure in place for the business.

"However, it is important to understand that discussions are at an early stage and no decisions have yet been made on the recapitalization structure. We will provide a preliminary update on our progress during the second quarter."


NTL will meet its cash-flow targets for the fourth quarter and issue its year-end results in March, Knapp said in the release. But the statement said 2002 guidance — which investors had expected earlier this month — was suspended as NTL proceeds with the recapitalization process.

Investors will watch for NTL's 2002 guidance closely, Janco Partners cable analyst Matt Harrington said, adding that the company's future could hinge on projections meeting past expectations.

In July, NTL projected 2002 cash flow would be 950 million pounds ($1.4 billion). In December, the company said it would revise that guidance in a conference call with analysts and investors early this year, but it has been silent so far.

"If the 2002 projections that the company originally gave were valid and they can stall for time, I think there's a good chance that this has a reasonable outcome, obviously with heavy, severe dilution on the equity," Harrington said. "If there's a big miss on the [cash-flow] numbers as well, this isn't going to be pretty."

Knapp has been under fire amid published reports that its bankers have called for the company to take on an equity partner. Those same reports have said that NTL's banks are also calling for the ouster of Knapp and NTL chairman George Blumenthal.

But on Jan. 31, Knapp dismissed rumors that he would leave the company, according to Dow Jones Newswires.

"I don't believe that is the best course of action, and nor does the board in this case," Knapp said, according to Dow Jones. "I deeply regret what's occurred both in terms of our employees and our stakeholders."

NTL has been desperate to pare down its debt, and has laid off more than 8,800 workers in the past year in an effort to keep costs down.

Though Knapp said NTL has the wherewithal to meet its current debt obligations, most analysts believe it will have to restructure its debt to keep on track. Given the complicated structure of NTL's debt financing, that won't be an easy task.

NTL's total debt obligation is about $17 billion, but it is split into 22 separate bond offerings, four separate preferred stocks and six bank-loan facilities.

According to analysts, NTL's best course of action may be a debt-for-equity swap or to take on a strategic partner to buy a large chunk of stock. AOL Time Warner Inc., Microsoft Corp. and Liberty Media Corp. are among the names that have been bandied about.