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August 26, 2006 12:10 am

Investors revive interest in NTL

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Some of NTL’s largest shareholders are holding out for an offer of at least $34 a share from its private equity suitors.

A private equity consortium, led by Providence Equity, the US buy-out group, and including Blackstone, Cinven and Kohlberg Kravis Roberts, has revived its interest in the cable company in the past month and has held discussions with Steve Burch, NTL’s chief executive.

Some large NTL shareholders are understood to have indicated that the consortium would have to pay at least $34 a share to persuade them to sell. Bill Huff, the investor who helped forge the merger that created the UK’s sole cable TV and broadband provider, is said to want a far higher price. NTL’s shares closed 2.5 per cent lower at $25.99 in New York on Friday.

An offer at a premium to the current share price could value NTL’s equity and debt at close to $20bn, making it Europe’s largest buy-out. However, the consortium has made no formal bid and it has yet to win over Mr Huff or Sir Richard Branson’s Virgin Group, NTL’s largest shareholder with 10.5 per cent.

Larry Robbins, chief executive of Glenview Capital Management, NTL’s sixth-largest shareholder with a 5 per cent stake in the group, questioned Mr Huff’s control of two seats on the board when he has been reducing his stake in the group.

Mr Huff, a distressed debt investor, accumulated stakes of well over 10 per cent in both NTL and Telewest before helping to engineer their merger earlier this year. His stake has since fallen to 6.8 per cent, making him the fourth-largest investor in the merged group.

“We’d like to see shareholders get a full and fair valuation,” Mr Robbins added, referring to the private equity approach. “Our hope is that NTL would open an [auction] process.”

Glenview’s comments echo concerns expressed in a letter sent to NTL earlier this month by RiverSource Investments, its second-largest shareholder. Mr Robbins said he had made his views known to Mr Burch and Jim Mooney, NTL’s chairman, in the past week.

Glenview was not acting in concert with RiverSource, he said, adding that Glenview was not seeking a board seat and was “agnostic” about whether the company was sold to private equity or a trade buyer or created similar value as an independent company.

If it chose the latter course, Mr Robbins argued it should increase the debt on its balance sheet.

Although this is a tactic the private equity team is also considering, it may concern some public shareholders given NTL’s history of bankruptcy.

An NTL spokesman said the company did not discuss its dealings with individual shareholders.

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