Liberty tightens UPC grip

February 1, 2002 Posted: 1124 GMT

LONDON (CNN) -- United Pan-Europe Communications, Europe's No. 2 cable company, detailed plans on Friday to wipe away debts of 7.5 billion euros ($6.4 billion).

UPC, which provides Internet, television and phone services in 18 countries, plans to convert 6 billion of debt and 1.5 billion of preference stocks into new shares in order to restructure it balance sheet.

The loss-making cable operator, like its rivals NTL, has racked up tens of billions of dollars in debts on snapping up rivals and laying cables to deliver fast internet and interactive TV services to consumers.

As demand and sales falter for such services the companies have been unable to repay debt. UPC said it would not pay 113 million in interest due on bonds on Friday and has until March 3 to make the payment.

New York-listed NTL, Britain's biggest cable company, hired advisers on Thursday to help it rebuild its battered balance sheet.

UnitedGlobalCom, which is owned by John Malone's Liberty Media and UPC's largest bond holder, has already agreed in principle to convert its 2.6 billion of debt and 300 million of preference shares, into new UPC shares, although terms are yet to be finalised.

The widely awaited restructuring plans substantially diluted the stakes of current shareholders by up to 90 percent, analysts told Reuters, pushing UPC's battered shares 5.3 percent lower to 0.37 after a delayed opening in Amsterdam.

"This is yet another example of how investors paid heavily for falling for the technology hype. We were all seduced by a clever business plan that never became reality," asset manager Gert Jan Geel of Eureffect.

UPC shares, which traded at more than 80 in March 2000, have lost 98 percent in 2001 to close at 0.39 on Thursday.

UPC is 53 percent owned by UnitedGlobalCom and Liberty Media owns 72 percent of UnitedGlobalCom.