Telewest close to debt deal

LONDON, England -- Telewest Communications on Thursday posted improved earnings for the second-quarter and said it may sell assets as it moved closer to a deal to reduce its huge debt load.

Just one day after replacing its chief executive, the UK cable group said earnings before interest, tax, depreciation and amortisation rose to £90 million ($145 million) between April and June, from £86 million in the previous quarter.

At the same time, Telewest said it had not ruled out the sale of its 17 percent stake in Scottish media group SMG, valued at about £56 million. However, it said it would likely hold on to Flextech, its television production unit.

"I think Flextech is more value as part of an integrated distribution content company," said Charles Burdick, who replaced Adam Singer as chief executive on Wednesday. Telewest purchased Flextech for £2 billion two years ago.

Burdick, who was previously the group's finance director, steps into the top job as Telewest struggles to rein in the group's £5.3 billion debt -- built up over the past three years through acquistions and network expansion.

Telewest is expected to follow its British rival NTL and swap some of its debt for shares in the group, which would essentially hand over control of Telewest to its bondholders.

"We're moving down the steps to a debt-for-equity swap. It is becoming more and more likely," he told reporters. "There are no issues with our banks. It's in their best interest."

Burdick said he was confident that Telewest's banks would approve a debt-for-equity swap, which would allow it to begin talks with its shareholders. "We haven't assumed that. We're examining all options,'' he said.

He added that if the group did not receive new financing and sell some of its assets, it would have enough cash to see it through another 15 months.

Telewest -- which has 1.8 million residential subscribers -- provides phone, Internet and pay-TV services over its European networks. Both Telewest and NTL compete for customers with the former monopoly BT Group and dominant pay-TV group BSkyB.

If Telewest and NTL are able to resolve their debt problems, analysts expect the two cable companies to merge operations.

Telewest (TWT) shares were flat at 1.98 pence in mid-morning London trading on Thursday.