Struggling NTL thrown lifeline

BONDHOLDERS have eased their stranglehold on the finances of beleaguered cable operator NTL, by agreeing to forgo a £68m interest payment due on Monday. The last-minute deal was reached with bondholders, who, with a syndicate of 39 banks, are in talks to restructure NTL's £12bn debt.

Analysts expect NTL's lenders to agree to swap debt for shares in order to cut its crippling £704m annual interest bill. 'Bondholders told NTL to keep the money in the business. This is a positive sign,' said a source close to the company.

The shares were suspended from the New York Stock Exchange last week because they had fallen so far. They are expected to trade on the informal over-the-counter market.

NTL supplies phone and TV services to 2.8m customers in the UK. It ran up its huge debt after it built new networks and bought cable companies, believing that an untapped demand for services such as fast internet access would generate more than enough cash to cover its borrowing. Rival Telewest is struggling under a £5.1bn debt for the same reasons.

NTL may file for Chapter 11 bankruptcy protection in the US with the support of its creditors. It said withholding the interest payment would not affect its service. Even if the bondholders had not agreed to forego the payment, its cash reserves and the £214m proceeds from the sale of its Australian broadcast business gave it enough to soldier on.

It said its banks, owed £4.8bn, remained supportive of its yet-to-be disclosed rescue plans. The banks are led by Bank of America, the Royal Bank of Scotland, Citibank, Deutsche Bank, JP Morgan, Morgan Stanley, Canadian Imperial Bank of Commerce and Paribas.