European cable company UGC plans to get its corporate finance adviser Morgan Stanley to buy NTL Ireland to help it gain control of the firm later this year.
The firm, which put in the highest bid for NTL with an offer of about €320 million, has passed its preferred bidder status to the US bank in an effort to avert a full regulatory review by the Competition Authority.
British cable firm NTL is keen to complete a quick sale of its Irish subsidiary and does not want to wait several months to get cash from the transaction. It had inserted a clause into the sale document for NTL Ireland that would enable it to block any bid that would trigger a full review.
But under a complex arrangement designed by UGC and Morgan Stanley, the US bank will buy the asset for about €320 million and hold it in trust for UGC until the deal passes an initial regulatory review by the Competition Authority.
Initial reviews undertaken by the Competition Authority usually last a month, during which time UGC will not be allowed any influence or operational control over NTL Ireland.
UGC executives, who met the Competition Authority last week for informal discussions, are understood to be confident the deal will pass a review.
If the purchase by Morgan Stanley is passed , the transaction can go ahead and NTL will be able to receive the money.
At that stage Morgan Stanley would begin a new sale process to sell NTL Ireland on to UGC, a move that would be expected to trigger a full-scale regulatory review. This review would probably take up to six months and investigate whether the combination of cable firm Chorus - which is already owned by UGC - and NTL would damage competition.
If the Competition Authority rejected the sale by Morgan Stanley of NTL Ireland to UGC on competition grounds, then the US bank would have to sell the firm to another party. However, this sale process would probably not begin until much later.
UGC Europe became the biggest European cable firm when it acquired Liberty Media's interests in Chorus and Belgium cable operator Telenet Group last year.
UGC operates in 14 countries worldwide and its cable networks reach approximately 15.5 million homes and over 11.1 million subscribers. The firm is controlled by the US cable entrepreneur, John Malone, who also owns a voting stake in the global media group News Corp.
