Telewest bondholders claim Liberty Media offer is 'illegal'

The billionaire John Malone's Liberty Media yesterday extended the deadline for its offer to buy up bonds in the troubled cable group Telewest after admitting the deal had attracted a lawsuit.

The US company said a group of Telewest bondholders, including Angelo, Gordon & Co, have filed a lawsuit in the US alleging its bond offer was "illegal".

The lawsuit, filed in a New York court, also alleges the offer had been "disseminated by means of an offer to purchase which contains material omissions and misrepresentations".

While Liberty Media said it believed its offer complied with the relevant rules, it said it planned to extend the deadline by just over a week to 19 July to give bondholders time to mull the allegations.

Liberty Media, which owns a quarter of Telewest's shares, had launched the bond offer in a bid to try and protect its investment if the UK cable company carried out a debt-for-equity swap.

Telewest, which has some £5.3bn of debt, confirmed last month that it was considering a debt-for-equity swap and other options to secure its future.

"The expiration date for the offer has been extended and withdrawal rights have been reinstated to permit the holders of Telewest notes and debentures to have adequate time to review the supplement and evaluate for themselves the merits of the offer in light of the allegations made in the lawsuit," Liberty Media said.

The company, whose offer had been due to expire today, is in the process of circulating a fresh document which both summarises the allegations laid out in the lawsuit and confirms the extension of the offer.

A court hearing was due to take place in the US yesterday to decide whether a preliminary injunction should be granted that would prevent Liberty Media from proceeding with the offer.

The move came as Liberty Media announced it had received offers for 17 per cent of Telewest's bonds, up from the 16 per cent it announced at the end of last month.

Its offer, launched in mid-June and designed to help it influence the outcome of Telewest's restructuring plans, is conditional on it gaining 20 per cent of the bonds. If the offer is successful, it plans to put forward a debt-for-equity plan.

In a letter to shareholders last week, Cob Stenham, Telewest's chairman, said the company could not yet determine "whether a restructuring on Liberty's terms would be beneficial or whether completion of the offer is beneficial or detrimental to the holders of the notes".

A group of Telewest bondholders, representing a significant proportion of the bonds, is also holding talks with Telewest about the potential refinancing.

"Your board has concluded that it is in the best interest of your company to enter into discussions with Liberty and the bondholders' committee to establish whether a proposal which would command the support of your board is capable of being agreed," Mr Stenham said.