Telewest allays fears of debt restructuring as losses widen
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Your support makes all the difference.The cable company Telewest yesterday moved to allay fears it is planning a major financial restructuring as it announced losses had widened to £1.9bn.
Shares in the company, which had initially risen after the fourth-quarter figures beat most analysts' expectations, closed down 9.9 per cent at 16p. Investors took fright that the company might be planning to restructure its £5.1bn debt pile.
Analysts said its chief executive, Adam Singer, and finance director, Charles Burdick, had confirmed they had discussed options with both Liberty Media and Microsoft, which each own about a quarter of Telewest.
But Mr Singer played down those comments, saying: "This is a case of being in a crowded theatre and somebody lighting a match and somebody else shouting fire. The real truth is we've always made it very clear that we have funds available to us and if we execute well we'll be in good shape."
Its rival NTL, which has around £12bn in debt, last month admitted it had appointed three banks to sort out its financial situation in a move that could erode the value of its shares. Analysts feared a similar scenario could be on the cards at Telewest.
"Liberty and Microsoft as shareholders and investors in this market ask us questions and talk to us in the same way that any of our other investors talk to us. When asked a question were you talking to Liberty about the nature of the balance sheet, we foolishly said yes because we talk to everybody," Mr Singer said.
Nevertheless, fears of a potential restructuring overshadowed Telewest's figures and its claims that it remained fully funded. In 2001, the company reported a £1.9bn pre-tax loss compared with a £701m loss a year earlier.
Stripping out the effect of a £1.1bn goodwill write-off and other exceptional items, however, pre-tax losses totalled £797m. Sales in the year jumped 17 per cent to £1.3bn.
Mr Singer said: "There's a lot of anxiety and jitters in the market so what we're trying to get across is that actually Telewest is in quite good shape."
He said the company's current facilities would, if it performed "well", comfortably take it to a break-even position, which analysts forecast to happen in 2004. Nor is the company in danger of breaching any of the financial covenants attached to its debt, Mr Burdick said.
Telewest has also reined in its capital expenditure plans for 2002 to between £500m and £550m, from around £600m.
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