The word this morning is that NTL is set to tell it's short-term debtors, to who it needs to repay $60m, that it is unable to do so. This will require it to file for bankruptcy in the US later today.

One wonders what this means for NTL's Joint Venture with the Toon?

-- Anonymous, April 01, 2002

Answers

It`s all a bit worrying isn`t it? I`m not wonderful at understanding the whole financial thing. I find the amounts of money involved terrifying, but you do hear mutterings about the financial bubble bursting on the football scene, and I wonder if this is the first `wobble`.(:oi

-- Anonymous, April 01, 2002

I hope they paid the sponsorship money up front. It may also mean a change from NTL on front of shirts.

As for further implications - who knows. I think NUFC owe them money and not the other way around.

BTW - didn't Freddy Fletcher go to work for them after he left NUFC?

-- Anonymous, April 01, 2002

Know you'll already have read this Clarky, but thought it might add some info for non-pink 'un readers. FT today:

NTL is expected to default on $96m in interest payments this week, triggering a restructuring of the US-listed cable operator's debt with its 60 banks and hundreds of bondholders.

The company is working on a deal with banks and bondholders that would involve a debt-for-equity swap. As part of the agreement, NTL could make a pre-arranged filing for Chapter 11 bankruptcy protection from its creditors.

The group warned last week that it could run out of cash before it reached agreement on a restructuring of its $17bn of debt.

If NTL and its creditors can agree a move into Chapter 11, NTL's business, which include the biggest cable television business in the UK as well as cable networks in continental Europe and Ireland, could continue to operate largely unaffected by the filing.

NTL could also achieve a restructuring without the threat of a creditor tipping the company into bankruptcy by demanding full repayment of its debts.

The company would only enter Chapter 11 once it had agreed with its lenders how and when the debts would be repaid.

NTL has a 30-day grace period after defaulting on the $96m of payments either to make the payments or reach an agreement with those it owes money. The company is expected to announce that it has agreed broad terms with its banks and bondholders within this time, and possibly this week.

NTL could then file for Chapter 11 with the support of its creditors and expect the US courts to grant it 60-90 days to finalise the terms of the debt work-out and relaunch the business.

People close to the discussions between NTL, its advisers and the creditor groups say negotiations continued over the weekend. The company, run by Barclay Knapp, has been holding board meetings every day to discuss the progress of the talks.

-- Anonymous, April 01, 2002

Thanks for that Benton - I hadn't seen it. I'm up here in the wilds of Northumbria and heard the basic announcement on BBC news this morning. Interesting to note that NTL's debts are $17billion - this makes the Toon's debts look like small beer!

Lynda - as part of the renegotiation of the £25m that NTL loaned NUFC a couple of years ago, the cost of NTL's sponsorship - some £3-4m - was deducted from the total outstanding. The rest was converted to non-voting shares in the Toon. As part of this deal, the two companies also set up a joint-venture to exploit the Toon's media interests.

Overall, this looks a good deal for the Toon as it avoids any future need to repay the loan. However, in its recent accounts the Toon was hit with something like £700,000 of losses arising from its share of the JV - this is not so good, and we can only hope this doesn't get any worse. I would certainly hope and expect that NUFC have escape clauses that would allow them to dissolve the JV if the losses became damaging to the Club's finances.

-- Anonymous, April 01, 2002

I would have thought NTL might be trying to get an amount of money out of NUFC to sell their half of the JV and make it an SV, although it would be pretty nonsensical situation

-- Anonymous, April 01, 2002

April Fool?

-- Anonymous, April 01, 2002

So, to summarise, the near bankrupt NUFC, is owned mainly by the near bankrupt CHD, and it's major sponsor is the near bankrupt NTL.

It's exciting being a big club isn't it? :-)

-- Anonymous, April 01, 2002

If there was the slightest chance of this affecting the toon don't you think the press would have published it?

They would love to write somethig like NUFC on veg of collapse.

-- Anonymous, April 01, 2002

****VERGE

-- Anonymous, April 01, 2002

tatty typing

-- Anonymous, April 01, 2002

The Swedes are also skint!

-- Anonymous, April 01, 2002

I think this was discussed on "The Three Legumes" on the radio the other day.

-- Anonymous, April 01, 2002

What happened to the green shoots sprouts of recovery?

-- Anonymous, April 01, 2002

They have applied for Chapter 11 protection according to the Observer. If they have paid, I guess we keep the NTL logo, Arsenal have kept the Sega Dreamcast despite there not being a product on sale anymore.

Out of interest, there are a few teams on the scrounge for sponsors next season, Arse, Leeds, Tootenham and possiblt the NTL stable.

-- Anonymous, April 01, 2002

This NTL problem, if it is one, also applies to A Villa and Rangers too, doesn't it? I don't know if they also made the same debt into equity deal with NTL too?

-- Anonymous, April 01, 2002

Barry - I haven't suggested there is an immediate problem for the Toon. My only immediate concern relates to losses from the JV flowing through onto NUFC's already wobbly financial statements, but that is an ongoing issue that has nothing really to do with the NTL situation - other than the fact that we felt it was desirable to get into bed with a management group that has got itself into $17 BILLION of debt!

This was always my concern with this arrangement. We got involved with NTL primarily because they offered a £25m loan. However, in order to refinance this loan we have now firmly committed ourselves to a commercial venture with this same company to exploit our media rights. To my mind, the right partner with which to exploit this critical area of the Toon's business should have been the very best company in this field - and not necessarily one that was simply prepared to loan us £25m. I hope I've explained this adequately.

Some time ago, I did write to ask the present Chairman, John Fender, if he he was able to provide reassurance to shareholders that PremiumTV (subsidiary of NTL) was indeed the best possible choice of partner for the JV. Unfortunately, but not unsurprisingly, Mr Fender didn't feel it was necessary to provide any response whatsoever to a small shareholder who couldn't influence any possible vote on the matter.

-- Anonymous, April 01, 2002

So if NTL goes bankrupt, Would it mean that we have to find new sponsors for next season? - we are now in a very good negotiating position as we should be in Europe next year and possiblt the cl. Surely if we had new sponsors they would pay us more than our existing deal...

-- Anonymous, April 02, 2002

Kegsy - I believe that technically NTL are already bankrupt. They have applied for Chapter 11 in the US, which provides certain protections while they seek to refinance their business. This will probably include converting some of the existing debt into equity (additional shares).

As I partially understand it, bankruptcy in the US is handled very differently to in Europe where it has more finality, is largely an indication of company failure, and providing a mechanism for creditors to be dealt with in strict priority order. In the US it is primarily a mechanism for ensuring the business continues under a different guise.

If NTL were to actually cease trading, then I suspect NUFC would be free to attract a new sponsor. However, I think this is an unlikely scenario.

-- Anonymous, April 02, 2002

We should get Guinness as the new sponsor: their advertising campaigns about not everything in black and white making sense would fit in seamlessly with us lot on the beer.

-- Anonymous, April 02, 2002

LOL :-D

-- Anonymous, April 02, 2002