United Pan-Europe Communications (UPC), the Dutch cable giant, today (Mon, Sept 30) filed for bankruptcy protection allowing it to push through a Euros2bn recapitalisation programme.
Under a revised version of a recapitalisation plan originally put together in July, parent company UnitedGlobalCom will take a 65.5% stake in the new company in return for assuming its debts. Other lenders will get 32.5% of the equity, while existing shareholders will see their ownership shrink to just 2%.
The company, which two years ago was worth $12bn and was seen as one of the most aggressive in the European media sector, is a cable TV mirror of Vivendi Universal. It came unstuck through a combination of over-aggressive expansion, the high cost of upgrading its networks and the slow realisation of hoped-for cross-over between telephony, cable TV and broadband internet.
In March 2000 it swooped to acquire content and broadcast group Scandinavian Broadcasting Systems (SBS Broadcasting), but that deal fell victim to a falling stockmarket in May 2000. Shortly after, plans to float its chello broadband division were dropped for similar reasons. Those setbacks exposed the group's cash flow problems and preceded an ever more desperate series of debt-for-equity swaps and the arrival of Liberty Media boss John Malone as the majority owner of parent UnitedGlobalCom.
The bankruptcy operation requires UPC to file for Chapter 11 in the US and for court-approved credit protection in The Netherlands. The company expects to emerge from both in 2003 with "an enterprise value of Euros5.2bn" and an equity valuation of some Euros1.9bn.
The shares, traded on the Euronext exchange, were suspended today at Euros0.06.