Telewest nearer £3.5bn debt swap

BRITAIN'S second largest cable company, Telewest, unveiled what its long-suffering investors desperately hope will be its final set of results as a near-bust, London-listed company.

The group, which suddenly parted company with chief executive Charles Burdick last month, hopes a £3.5bn debt-for-equity swap will be completed by this summer.

Today's preliminary statement gave no update on progress in this. Instead investors were reminded: 'We are currently in default on our outstanding notes and debentures, certain of our finance leases and our bank facility. Because we are not making current interest payments on our notes and debentures, we have been able to finance our remaining working capital needs through available cash and cash generated through operations.'

The company warned: 'However, we do not believe that our creditors will continue to forbear from declaring defaults if our financial restructuring is not implemented in a timely manner.'

Given the interest payment halt and the fact that 2002 was hit by a £1.5bn goodwill write-down, last year's numbers showed a considerable improvement.

Operating losses before exceptional charges were cut by 74% to £62m in the year to December 2003. Net losses after all charges were slashed from £2.2bn to £272m.

Acting chief executive Barry Elson, a 62-year-old veteran of US cable TV who was due to become chairman of the restructured Telewest, said: 'Our fourth-quarter and full-year results demonstrate a year of solid performance leaving us with improved revenue and cash flow.

'Our marketing and churn reduction efforts have improved customer growth and this has continued into the current quarter.'

Ahead of the restructuring in which existing shareholders will end up with only 1.5% of the new Nasdaq-listed company and bondholders-with 98.5%, Telewest has concentrated on reducing faults on its cable network and on better customer service.

It added only 9,000 customers in the final quarter, reflecting its drive to better quality and higher usage rather than new clients.

Elson said that the average spend during the quarter had risen to £44.42 a month, or £533 a year. He added that almost one in six Telewest households were now 'triple-play' - buying broadband, telephony and television from the group.

Burdick is due a £500,000 pay-off following his departure but has agreed to remain as a consultant at least until the restructuring is complete.