Microsoft offers to sell Telewest stake to Liberty

Microsoft has offered to sell its 23.6 percent stake in financially troubled U.K. cable operator Telewest Communications PLC to Liberty Media Corp. for close to US$327 million [M], according to a statement Microsoft filed with the U.S. Securities and Exchange Commission on Wednesday.

Under the terms of the offer, Microsoft , in Redmond, Washington, would sell its 696,378,678 shares in Telewest to Liberty Media at a price equal to the average stock price for the three trading days between June 26 and June 28 and the next three trading days, the filing said. Based on Telewest's closing stock price on Wednesday of $0.47 per share, the value of the deal is close to $327 million [M].

Under terms of the deal, Liberty Media has 30 days to accept Microsoft's offer. If Liberty Media, which is based in Englewood, Colorado, declines to purchase the stake, Microsoft may choose to sell off its shares to the public within three months of the expiration of the 30-day option period, the SEC filing said.

If the deal does go through, Liberty Media would boost its stake in Telewest from 25.2 percent to 48.8 percent, further solidifying its position as Telewest's single largest shareholder.

Microsoft and Liberty Media executives could not immediately be reached for comment.

Based in London, Telewest provides Internet, telephone and television services to 1.8 million [M] households in the U.K., with an additional 73,600 business customers for its voice and data telecommunication-service offerings, according to information posted on the company's Web site. The company's cable network passes 4.9 million [M] homes in the U.K., it said.

Despite its customer base and the reach of its network, Telewest is beset by serious financial woes, with the company posting a net loss of $178 million [M] during the first quarter. During that quarter, the company posted a $44 million [M] operating loss and was saddled by $173 million [M] in interest payments. The company has a total of $8.78 billion [B] in debt and other financial liabilities, it said.

In June, Liberty Media began a concerted effort to boost its stake in Telewest, offering to buy some of the company's debt from creditors in a bid to gain a seat at the table for discussions about restructuring and recapitalizing Telewest. In a letter to shareholders issued Thursday regarding Liberty Media's offer, the company said, "Telewest does not have any additional information regarding Liberty's intentions and cannot determine whether a restructuring on Liberty's terms would be beneficial."

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