Virgin Media has secured approval from its banks to postpone repayments on its £4.3 billion debt until 2012, giving it an extra three years to refinance its loans.

The New York-listed group announced on October 13 that it was seeking to make changes to its debt package in light of the turmoil in the credit markets. It said then that it had the “unanimous support” of its ten biggest bank lenders.

The company, in which Sir Richard Branson is the biggest individual shareholder, was due to refinance its debt next year, ahead of a set of large repayments, including £1.1 billion in 2010 and just under £1 billion in 2011.

However, the company chose to bring forward talks with its lenders as a result of the credit squeeze. The banks are understood to be receiving fees of up to £70 million and a further £50 million a year in increased margins.

Analysts said that, although the move would leave the group with a large debt burden to pay off in 2012, the three-year delay would buy the company time to look at other options, including the sale of assets.

It is also hoped that Neil Berkett, chief executive of Virgin Media, will be able to bring the business to the point where free cashflow can cope with the repayments.

The group's debt is made up of just over £4.3 billion of term loans in A, B and C tranches, plus a £100 million revolving credit facility.

Fears over Virgin Media's high debt have weighed down its shares, with stock falling about 70 per cent in the past 12 months.

The decision to address the issue has been welcomed by investors. Shares rose 29 per cent on October 13 and a further 9.5 per cent to $6.31 in lunchtime trading in New York yesterday, although they had surged 30 per cent in pre-market trading.

The group said yesterday that it would provide a full update on the results of the amendment process when it announced third-quarter figures on Thursday.



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