Update Virgin Media to restructure debt -
Virgin Media to restructure debt
The US stock market has looked enthusiastically on UK cable giant Virgin Media’s plans to restructure its £4bn worth of debt. Virgin’s stock rose some 40% on Oct 14, to $7.21, in response to the scheme, which if nothing else buys the company more time to move into profit and pay.
Virgin Media says it has had unanimous support from its ten biggest bank lenders, led by Deutsche Bank, which in total represent almost half of the £4.3bn of outstanding debt still on Virgin’s books. A Virgin Media statement said it was now seeking the necessary consent of two-thirds of its lenders to changes in the main agreement between lenders and the company.
Currently Virgin Media has to start paying down this debt early in 2010, which was already in some doubt. Virgin Media, if it is able to conclude the restructuring, will postpone such repayments starting until June 2012. The banks, who are not acting out of charity, will earn a reported £70m in fees and the slippage will add to Virgin’s debt interest payments.
Neil Berkett, the group’s chief executive, said: “Virgin Media has never been in better operational shape and generates significant cashflow. These amendments to our senior facilities, if approved, will enhance our financial flexibility and allow management to focus on continuing to enhance operations and grow cashflow. We believe that these amendments are in the best interest of customers, stockholders, lenders, employees and other stakeholders in light of the current status of the credit markets.”
Virgin Media says it has already paid down about $900m of debt from its own cash resources and the proceeds from subordinated debt notes. It was obliged (under its present terms) to pay $1.1bn in 2010 and another $1bn in March 2011.