Telewest Communications files for protection under Section 304

By Jeff Pines

Washington, April 30 - Telewest Communications plc and Telewest Finance (Jersey) Ltd. filed for protection under Section 304 of the U.S. Bankruptcy Code, according to April 28 filings with the U.S. Bankruptcy Court for the Southern District of New York.

Section 304 protects foreign companies from legal actions in U.S. courts while they reorganize under the laws of their countries. Without that protection, Telewest Communcations fears it would be forced to spend its money defending itself in U.S. courts while trying to resolve its financial difficulties at home.

Telewest Communications wants to offer 98.5% of the common stock in a new holding company in exchange for the cancellation of all of the notes the company and Telewest Finance Ltd. sold and for certain other claims. Eligible shareholders would get 1.5% of the new shares, according to Securities and Exchange Commission filings.

The new holding company for Telewest's businesses would be called Telewest Global, Inc. It will be incorporated in Delaware and will apply to list its shares on the Nasdaq National Market. Telewest expects trading to start on July 19.

It reached an agreement with key bondholders, major shareholders and its senior lenders in April, the company said.

The London-based broadband communications company got into trouble after taking on a large amount of debt to build its cable network and acquire smaller companies, and said its debt load is unsustainable.

Without a restructuring, the company will have to file for some form of bankruptcy, it said in April filings with the SEC.

A vote on the reorganization plans will be held June 1 in London.

Telewest requested a hearing for temporary protection from legal action in U.S. courts on May 27 and another for permanent protection on June 16. The ruling would apply to both companies.

Telewest's case number is 04-12916, and Telewest Finance's case number is 04-12917.

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