Capital Markets

Lenders Lend Some Slack to Virgin Media

The UK-based cable-TV company will be able to push back repayment on $2.7b of loans.
Stephen TaubNovember 3, 2008

Lenders to companies are showing some willingness to revise the terms of corporate debt. In the latest such case, Virgin Media Inc., a UK-based cable television company, said lenders had tentatively agreed to the company’s proposed amendments to its senior facilities agreement.

Virgin Media’s senior facilities agreement currently comprises $7 billion of term loads in A, B, and C tranches and a 100-million pound revolving facility, according to Reuters.

Under the tentative deal, the company — formed by the 2006 merger of NTL Inc. and Telewest Global Inc. and purchase of Virgin Mobile Holdings — will be able to push back the repayment of $2.7 billion in loans, according to the Wall Street Journal. The debt was due to be repaid in 2010 and 2011, the paper noted.

Under the deal, Virgin Media, which trades on Nasdaq, will have until 2012 to pay creditors, according to the report. Richard Branson owns 10.4 percent of the company, according to reports.

The senior loan consists of term loans broken into three tranches and a 100 million pound revolving facility, according to Reuters.

The senior loan would have normally been refinanced by mid-2009 to avoid the payments, or the company would have been sold. However, given the current credit market problems Virgin Media sought to address the issue well in advance, according to Reuters.

Its report said that Virgin Media offered its lenders either to remain in the existing loan or to accept significant improvements to existing margins and fees in return for agreeing on a number of changes.

Virgin Media is not the only company refinancing its debt before a portion of it must be repaid. National Amusements Inc., the investment vehicle of Sumner Redstone and the company that holds controlling stakes in CBS Corp. and Viacom Inc., has been desperately trying to restructure $1.6 billion of debt ahead of a December deadline to pay off half of it, the Wall Street Journal reported.