Ailing NTL under fire for bill delays

TROUBLED cable operator NTL is delaying payments to suppliers, according to a secret report by Britain's biggest credit reference agency. Experts say the move is a common sign of a company that may be close to collapse.

The group is also reportedly set to confirm this week that it cannot pay its £12bn debt, setting the stage for the biggest recapitalisation in British corporate history.

NTL has reportedly offered groups including Microsoft and AOL Time Warner at least 25% of the firm in return for a £1.4bn cash injection.

The credit report from Experian says that until three months ago, NTL was paying suppliers within agreed times. But now payments are allegedly being made an average 57 days late.

Experian said that such a pattern 'sets alarm bells ringing all over' and often ends in a company going bust. A spokesman said: 'When a company has been paying all its bills on time then payment periods suddenly shoot up, it can be a sign of severe cashflow problems - and in many cases, the receivers are called in within a matter of months.'

Telecoms rival BT is worried about £60m owed by NTL. The money is for BT giving NTL customers access to its network. 'Its payments are not keeping up with the growth of the debt,' said a source. BT service obligations are enforced by the regulator, so it cannot cut off a company's access to its network for non-payment until it has gone through an exhaustive series of warnings.

NTL's sudden change in its payments policy coincides with a decision to conserve cash rather than pursue growth. But the company insists that its average payment delay is less than 50 days and that it had enough liquidity to carry it safely through to the end of the year.

It is likely to announce this week that it is trying to negotiate with bondholders to persuade them to swap debt for shares. But NTL on Sunday denied reports that it would tell creditors and shareholders around £6.3bn of its debt needed to be written off.

Bondholders could end up with between 50% and 70% of the restructured business. Existing shareholders, which include France Telecom, could be left holding just 15%. NTL is listed in New York but Britain is its largest customer base.

Energis finance director Bill Trent is likely to go after last week's shock profits warning wiped more than 60% off the value of the telecoms company. The warning included a statement saying that Energis could be forced to breach agreements signed with its banks just a few weeks earlier as part of a new £750m refinancing package.

City sources claim that financial reporting systems for which Trent was responsible did not pick up the fact that revenues from recent big orders had failed to materialise. A source said: 'About 90% of the City predict that Trent will have gone within six months.' Energis says it now probably will not breach the covenants it reached with its banks, and that they are still supporting the company.