Ntl (NASDAQ:NTLI)
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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withdrawn its ruling request.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.