Exhibit 2.4
[GRAPHIC OMITTED]
Neutral Citation Number: [2004] EWHC 1466 (Ch)
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Case No: 2518 of 2004 & 2519 of 2004
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IN THE HIGH COURT OF JUSTICE
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CHANCERY DIVISION
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COMPANIES COURT
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Royal Courts of Justice
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Strand, London, WC2A 2LL
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Date: 21/06/2004
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BEFORE:
THE HONOURABLE MR JUSTICE DAVID RICHARDS
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IN THE MATTER OF TELEWEST COMMUNICATIONS PLC
AND
IN THE MATTER OF TELEWEST FINANCE (JERSEY) LTD
- AND -
IN THE MATTER OF THE COMPANIES ACT 1985
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ROBIN DICKER QC AND RICHARD SNOWDEN QC (instructed by
FRESHFIELDS BRUCKHAUS DERINGER) for the Telewest Communications
Plc and Telewest Finance (Jersey) Ltd
RICHARD SHELDON QC (instructed by FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON LLP) for the Bondholder Committee
MARTIN MOORE QC AND SIR THOMAS STOCKDALE (instructed by SHERMAN
& STERLING (LONDON) LLP) for Opposing Bondholders
Hearing dates: 17 June 2004
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Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official
shorthand note shall be taken of this Judgment and that copies
of this version as handed down may be treated as authentic.
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Mr Justice David Richards
MR JUSTICE DAVID RICHARDS:
1. Telewest Communications plc (Telewest) and its wholly-owned subsidiary
Telewest Finance (Jersey) Limited (Telewest Jersey) seek the sanction
of the court to schemes of arrangement under section 425 of the
Companies Act 1985. The schemes are proposed between each company and
their respective bondholders, who are creditors for very substantial
sums.
2. I set out some of the details of the proposed schemes and the
background to them in a judgment which I gave on the companies'
applications to convene the meetings to the schemes. Reference can be
made to that judgment for the details.
3. For present purposes it is enough to say that Telewest has ten series
of unsecured bonds outstanding, of which six are denominated in US
dollars with a total principal amount of $3.987 billion and four are
denominated in sterling with a total principal amount of (pound)1.099
billion. Interest has not been paid on the bonds since October 2002
and if interest accrued to 30 April 2004 is added, the total amounts
due on the dollar bonds is $5,172 billion and on the sterling bonds is
(pound)1,160 billion. Telewest Jersey has a single series of
outstanding bonds with a total principal amount of $500 million on
which interest has also accrued due. The Jersey bonds were guaranteed
by Telewest and the proceeds of the issue were lent to Telewest. The
holders of these bonds are therefore also creditors of Telewest, as is
Telewest Jersey. The Telewest scheme is proposed to be made with its
bondholders, the holders of the Telewest Jersey bondholders as
creditors under the guarantee of their bonds and Telewest Jersey. The
scheme also makes provision for ancillary claims arising in connection
with the bonds, such as misselling claims, but none has yet been
notified to Telewest. Under the terms of the scheme all ancillary
claims will be barred unless notified in accordance with the terms of
the scheme by the day following its effective date. The Telewest
Jersey scheme is proposed to be made with its bondholders and any
other persons with ancillary claims.
4. Telewest is the holding company of a large group of companies engaged
principally in telecommunications. Its shares are listed in London and
on Nasdaq in New York. It borrowed heavily in order to fund the
capital costs of its network construction and the acquisition and
operation of its UK cable business. In the course of 2002 it
encountered severe financial difficulties and began negotiations with
its senior lenders and bondholders. In October 2002 it defaulted on a
swap transaction which resulted in a default under its banking
facilities and under all its bonds. The swap counterparty presented a
winding-up petition against Telewest on 29 October 2002 which has been
adjourned from time to time to allow for the proposed financial
restructuring, including the two schemes of arrangement now before the
court. The petition will be dismissed if the schemes are sanctioned
and the restructuring is completed.
5. It is accepted that the companies are heavily insolvent and that, in
the absence of arrangements with the creditors, including the
bondholders, the companies would have to be placed in liquidation or
administration.
6. The proposals embodied in the schemes represent the product of
difficult and protracted negotiations with an informal bondholders'
committee and others. The principal feature of the schemes is that the
bonds and claims arising under them will be cancelled in exchange for
98.5 per cent of the issued share capital of a new holding company,
Telewest Global Inc. Substantially all of Telewest's assets will be
transferred to Telewest Global Inc and the remaining 1.5 per cent of
its shares will be held by the present shareholders of Telewest.
7. The shares in Telewest Global Inc will be denominated in US dollars
and will be issued to an escrow agent for distribution among the
bondholders and the other scheme creditors in proportion to the value
of their claims.
8. In order to determine the number of new shares to be transferred to
each scheme claimant, it is necessary to express all claims covered by
the scheme in a single currency. For this purpose, the scheme provides
for sterling claims to be converted into US dollars in accordance with
a formula defined in the scheme as the Scheme Rate and described in
argument as the Average Exchange Rate. This rate is the average of the
closing mid-point spot rates in London for the conversion of sterling
into US dollars, as reported by Bloomberg LP for each trading day in
the period commencing 1 October 2002 and ending on 26 April 2004, the
last practicable date before posting the explanatory statement for the
scheme.
9. It is this choice of currency conversion rate which has been in
dispute both on the application to convene the meeting to consider the
Telewest Scheme and on the present application to sanction the scheme.
10. On the earlier application seven holders of sterling bonds appeared by
counsel to argue either that no meeting should be convened unless the
currency conversion rate were changed to the spot rate as at the date
on which scheme claims were valued or, in the alternative, that
separate meetings of the dollar and sterling bondholders should be
convened instead of a single meeting of all bondholders. I rejected
both submissions in the judgment which I delivered on 26 April 2004.
On 30 April 2004 each of the companies proceeded to convene a meeting
of scheme creditors to be held on 1 June 2004. On 10 May 2004 the
opposing bondholders applied to the Court of Appeal for permission to
appeal against my decision. Permission was refused on paper by
Neuberger LJ on 24 May 2004 and by Mummery and Sedley LJJ at an oral
hearing on 2 June 2004.
11. At the meetings of the Telewest and Telewest Jersey scheme creditors
held on 1 June 2004, the schemes were approved by the statutory
majorities provided by section 425(2) of the Companies Act 1985. I
will go into more detail of the majority at the meeting of Telewest
scheme creditors later in this judgment.
12. With the exception of Threadneedle Asset Management Limited
(Threadneedle), the same sterling bondholders appear on this
application to oppose the making of an order to sanction the Telewest
scheme as previously appeared on the application to convene a meeting.
Their holdings represent approximately 12.78 per cent of the sterling
bonds, and they voted against the scheme at the meeting held on 1 June
2004. Threadneedle voted in favour of the scheme, but has filed
evidence stating that it continues to take the view that the Average
Exchange Rate unfairly benefits the dollar bondholders at the expense
of the sterling bondholders.
13. Since October 2002 the market value of the US dollar has depreciated
as against sterling. On 1 October 2002 the spot rate was about
$1.557/(pound)1 and on 30 April 2004, which is the date under the
scheme for the ascertainment of scheme claims, the spot rate was
$1.7754/(pound)1. The Average Exchange Rate used in the scheme
produces an exchange rate of $1.6650/(pound)1.
14. It is the opposing bondholders' case that the Average Exchange Rate
unfairly discriminates against the sterling bondholders to the benefit
of the dollar bondholders. They submit that the fair exchange rate for
use in the scheme is the spot rate on the Record Date, being the date
under the scheme for the ascertainment of scheme claims.
15. Their starting point is that, as Telewest is insolvent and the scheme
is proposed as an alternative to a distribution of assets in a
winding-up, the relevant rights of the bondholders against which the
terms of the scheme should be assessed are their rights in a
liquidation. This applies the principle established in Re Hawk
Insurance Co Ltd [2001] 2 BCLC 480 and other authorities. The choice
of the Average Exchange Rate, as against the spot rate on the Record
Date, involves a departure from those rights. For the reasons given in
my previous judgment I accepted that submission, and I accepted that
it could well produce, as in fact it has done, a less favourable
result for the sterling bondholders and a correspondingly better
result for the dollar bondholders. I held however that, taking the
scheme as a whole, it did not involve such a disparity between the
rights of the two groups of bondholders as to require separate
meetings. The issue of fairness, which remained, was for consideration
at the hearing to sanction the scheme. This approach was approved by
the Court of Appeal. In paragraph 17 of his judgment, Mummery LJ said:
"In so far as there are matters of unfairness alleged
by Mr Moore on behalf of his committee of sterling
bondholders, I am satisfied, on the basis of the
arguments which have been advanced by Mr Snowden and by
Mr Sheldon, who are the respondents to the proposed
appeal, that all of those matters can be satisfactorily
dealt with by the judge at the sanctions hearing. In my
view, that is the appropriate time and place at which
to consider them."
16. The precise effect of using the Average Exchange Rate as against a
spot rate on the Record Date is now known. As mentioned above, the
Average Exchange Rate is $1.6650/(pound)1 and the spot rate on 30
April 2004 was $1.7781/(pound)1. The difference means that the number
of shares in the new holding company to be received by the dollar
bondholders will be 1.85 per cent more than if the spot rate had been
used, and the number to be received by the sterling bondholders will
be 4.64 per cent less. The value of the difference, on the basis of
the current market values of the bonds, is $50.8 million out of a
total market value of some $3.5 billion.
17. Mr Moore QC, appearing for the opposing bondholders, submits that this
departure from the rights of creditors in a winding-up and the pari
passu principle involves an unfair and unjustifiable interference with
the rights of the sterling bondholders.
18. Mr Dicker QC for Telewest and Mr Sheldon QC for the Bondholders'
Committee, which includes holders of both dollar and sterling bonds,
submit that the scheme taken as a whole is fair as regards all
bondholders and that the inclusion of the Average Exchange Rate is
fair as regards all bondholders. They rely on the majorities in favour
of the scheme at the meeting of bondholders, at which a majority
representing 96.7 per cent in number and 95.1 per cent in value of
those voting were in favour of the scheme. For the purpose of
determining value for voting purposes the closing mid-point spot rate
of $1.8337/(pound)l on 28 May 2004 was used for conversion into a
single currency. There was a high turnout for the meeting. The total
amount of known scheme claims was about $7.293 billion, out of about
$6,092 billion voted, representing some 83.5 par cent of the total.
This rises to 87.48 per cent if irregular proxies for the meeting
rejected by the chairman are included: the rejected proxies were
submitted by 33 bondholders of whom 28 holders with claims amounting
to about $246 million were in favour and 5 holders with claims
amounting to about $7.4 million were against.
19. Mr Dicker and Mr Sheldon also rely on a further analysis of the votes
which shows that, looking only at the votes of sterling bondholders,
the scheme was approved by a majority of 85.1 per cent in number
representing 82.9 per cent in value of those voting. On that basis
they submit that, if Telewest had been required to convene a separate
meeting of sterling bondholders, it would have been approved at that
meeting by a substantial margin over the statutory requirement of a
simple majority in number representing 75 per cent in value. Telewest
and the Bondholders Committee also rely on the fact that a number of
bondholders with substantially larger holdings of sterling bonds than
dollar bonds, including two members of Bondholders Committee, voted in
favour of the scheme. All parties are agreed that a bondholder whose
holdings represent equal percentages of the total claim values of
sterling and of dollar bonds is not affected by the adoption of the
Average Exchange Rate or a spot rate; any disadvantage in respect of
the bonds of one currency is matched by an equivalent advantage in
respect of the bonds of the other currency.
20. The classic formulation of the principles which guide the court in
considering whether to sanction a scheme was set out by Plowman J in
Re National Bank Ltd [1966] 1 WLR 819 by reference to a passage in
Buckley on the Companies Acts, which has been approved and applied by
the courts on many subsequent occasions:
"In exercising its power of sanction the court will
see, first, that the provisions of the statute have
been complied with, second that the class was fairly
represented by those who attended the meeting and that
the statutory majority are acting bona fide and are not
coercing the minority in order to promote interests
adverse to those of the class whom they purport to
represent, and thirdly, that the arrangement is such as
an intelligent and honest man, a member of the class
concerned and acting in respect of his interest, might
reasonably approve.
The court does not sit merely to see that the majority
are acting bona fide and thereupon to register the
decision of the meeting, but, at the same time, the
court will be slow to differ from the meeting, unless
either the class has not been properly consulted, or
the meeting has not considered the matter with a view
to the interests of the class which it is empowered to
bind, or some blot is found in the scheme."
21. This formulation in particular recognises and balances two important
factors. First, in deciding to sanction a scheme under section 425,
which has the effect of binding members or creditors who have voted
against the scheme or abstained as well as those who voted in its
favour, the court must be satisfied that it is a fair scheme. It must
be a scheme that "an intelligent and honest man, a member of the class
concerned and acting in respect of his interest, might reasonably
approve." That test also makes clear that the scheme proposed need not
be the only fair scheme or even, in the court's view, the best scheme.
Necessarily there may be reasonable differences of view on these
issues.
22. The second factor recognised by the above-cited passage is that in
commercial matters members or creditors are much better judges of
their own interests than the courts. Subject to the qualifications set
out in the second paragraph, the court "will be slow to differ from
the meeting".
23. In a case such as the present where, in one respect, the terms of the
scheme are recognised as producing a different and unfavourable result
for one group of bondholders, as against their rights in a winding-up,
the court must apply the principles set out by Plowman J having regard
to this feature. Taking the facts of this case, the court must
recognise that there is a difference in the position of the sterling
and the dollar bondholders. It is not such a difference as to prevent
them from consulting together in a single meeting with a view to their
common interest and so require separate meetings, but it is a
difference which must be considered by the court when deciding whether
to sanction the scheme. This is precisely the effect of what Mummery
LJ said in paragraph 17 of his judgment which I have already cited. In
considering this scheme the court must in my judgment be satisfied
that it is one which an intelligent and honest holder of sterling
bonds, acting in his interest as such, might reasonably approve.
24. Inevitably the argument at this hearing has centered on the
contentious issue of the exchange rate. But it remains the case now,
as it did at the hearing of the application to convene the meeting of
bondholders, that all bondholders represented at the hearing, as well
as the company, are agreed that in all other respects the proposals
are very much in their interests. They are agreed that bondholders
will do very much better under these proposals than they would in a
liquidation. Instead of a sale of the assets of Telewest, whether on a
going concern or break-up basis, and a cash distribution of the net
proceeds to the bondholders and other creditors, the bonds will be
cancelled and the bondholders will receive shares in the new holding
company of the Telewest group. They will together own 98.5 per cent of
the equity of the new group, which by reference to the current market
prices for the various issues of bonds, is considered to have a value
of some $3.5 billion.
25. All parties recognise that in order to achieve this result it is
necessary to express all claims in a single currency so as to form the
basis of distribution of the new shares. The single currency chosen
for the scheme is US dollars because the new holding company is a US
corporation but this involves no disadvantage to any set of
bondholders. The result would be the same if sterling had been chosen.
26. The choice of the Average Exchange Rate, as opposed to a spot rate,
was made by the Bondholders' Committee and approved by Telewest. The
negotiations involving Telewest, the Bondholders' Committee and others
were, as the evidence shows, difficult and protracted. Evidence filed
on behalf of the Bondholders Committee establishes that the decision
to use the Average Exchange Rate was made in the autumn of 2003. It
was addressed, together with a large number of other points, after the
key features of the proposals had been agreed in August 2003. It was
first included in a draft of the explanatory statement on 23 October
2003 and formally agreed by the Bondholders' Committee and other
parties in November 2003. At that time the members of the Bondholders'
Committee as a whole held approximately 41 per cent of the claim
values of the dollar bonds and approximately the same percentage of
the sterling bonds. Three out of the six members of the committee held
a greater percentage of the claim value of the sterling bonds than of
the dollar bonds, and would therefore have benefited from an exchange
rate which benefited sterling bondholders generally. Two members of
the committee held a significant proportion of their bondholdings in
sterling bonds (99.8 per cent and 72 per cent respectively).
27. The evidence establishes the reasons for the adoption of the Average
Exchange Rate, as opposed to a spot rate. It was considered that a
spot rate on a particular date would be arbitrary in its effect,
making the proportions in which the shares in the new holding company
were divided subject to short-term fluctuation in exchange rates.
Short-term volatility is clearly shown by the evidence and it was
considered that an average rate would be fairer. The starting date for
the period, 1 October 2002, was chosen because Telewest then defaulted
on the bonds and other obligations and it could have gone into
liquidation at any time thereafter. It did not do so only because of
the forbearance of bondholders. The end of the period, 26 April 2004,
was the latest practicable date before sending out the notice of
meeting and explanatory statement. It was considered desirable that
bondholders should know the applicable exchange rate before deciding
how to vote on the scheme.
28. In August and September 2003 the Average Exchange Rate and spot rates
produced results which were either much the same or favoured the
sterling bondholders to a very modest extent. The divergence resulting
from a depreciation of the dollar against sterling had started by 23
October 2003 and was very much more marked by 12 December 2003 when
the details of the proposals were announced. The final outcome of
using the Average Exchange Rate could not then be known or predicted,
because it would depend entirely on the relative performance of the
dollar and sterling in the currency markets between December and the
posting of the scheme documents, which in the event was some 4-1/2
months later.
29. Objection was immediately taken by one of the opposing bondholders to
the use of an average rate particularly because it was to a
considerable extent dependent on figures which were already
historical. It was concerned that this average rate, as opposed to a
spot rate on a future date, made it difficult or impossible to hedge
effectively against future currency movements. On 19 January 2004 the
Trustee under the indentures constituting all or most of the series of
bonds, gave notice that it had been contacted by at least one
significant holder of sterling bonds objecting to the use of the
Average Exchange Rate on the grounds that it would result in a
significant reduction of the claims of sterling bondholders. The
notice stated that the bondholder in question was seeking to form an
informal committee of sterling bondholders and invited sterling
bondholders to respond. The notice made clear that the Trustee itself
took no position on this issue. In due course the informal committee
of sterling bondholders for whom Mr Moore appears was formed.
30. In arguing that it would be appropriate for the scheme in its present
form to be sanctioned, Mr Dicker and Mr Sheldon rely not only on the
reasons for adopting the Average Exchange Rate and on the majorities
voting in favour of the scheme both of bondholders as a whole and of
sterling bondholders alone, but also, as mentioned above, on the way
in which individual holders of sterling bonds voted. Threadneedle
Asset Management Limited holding (pound)8 million nominal in sterling
bonds and no dollar bonds, voted in favour. The two members of the
Bondholders' Committee with substantially more sterling bonds than
dollar bonds voted in favour of the scheme. I was informed bv Mr
Dicker near the start of the hearing that they hold 21.7 percent and 9
per cent respectively of the total nominal value of the sterling
bonds. Deutsche Bank holds (pound)10.1 million nominal of sterling
bonds and $3.4 million nominal of dollar bonds and Lionheart
Investments holds approximately (pound)17 million nominal of sterling
bonds and approximately $33 million nominal of dollar bonds. They both
voted in favour of the scheme. All these bondholders stood to lose
from the use of the Average Exchange Rate as against the spot rate on
the Record Date. In view of these votes for the scheme by
sophisticated investors, Mr Dicker and Mr Sheldon submitted that it
was impossible to say that it was not a scheme which an intelligent
and honest sterling bondholder, acting in his interests as such, could
not approve.
31. Mr Moore argued that these votes should not be taken at face value. He
pointed out that a director of Threadneedle Asset Management Limited,
who had made the principal witness statement in opposition to the
application to convene the meeting of bondholders, had provided a
further witness statement for this hearing in which he stated that
Threadneedle continued to take the view that the Average Exchange Rate
unfairly benefited the dollar bondholders at the expense of the
sterling bondholders. The fact is, however, that it voted in favour of
the scheme notwithstanding this feature. As regards Deutsche Bank and
Lionheart, it was pointed out that they might have the benefit of
arrangements which protected them from, or mitigated, the effects of
the Average Exchange Rate or they might have associated companies with
counterbalancing holdings of dollar bonds. As another possibility,
they might not be holding their bonds as principal but on behalf of
others who enjoyed similar protection against the effects of the
Average Exchange Rate. This is, however, all speculation. The opposing
bondholders adduced no evidence from Deutsche Bank or Lionheart or
others to support these points.
32. Similar points were made in respect of the two members of the
Bondholders' Committee whose combined holdings represent over 30 per
cent of sterling bonds. They accordingly suffer a significant
disadvantage from the use of the Average Exchange Rate as against the
spot rate on 30 April 2004. The opposing bondholders had no evidence
to support their suggestion that they might be protected from the
effects of that exchange rate. As members of the Bondholders'
Committee, they were however represented by counsel supporting the
application to sanction the scheme. Telewest, in seeking the sanction
of the court to the scheme, relied strongly on their votes. In these
circumstances, I made clear my view that, in line with the
well-established duty of frank disclosure to the court by proponents
of a scheme of arrangement, Telewest and the Bondholders' Committee
were obliged to disclose grounds on which it could reasonably be said
that the two relevant bondholders were wholly or partly protected from
the effect of the Average Exchange Rate. I was told by both counsel
that they were not aware of any such grounds and none has been
disclosed to me.
33. Mr Moore also pointed out that the two relevant bondholders had signed
undertakings in November 2003 to support the scheme and they were
therefore bound at the time of the meeting to vote in its favour. The
important point, in my judgment, is that they gave the voting
undertakings in November 2003 in the knowledge that the Average
Exchange Rate incorporated in the proposals was at that time
favourable to the dollar bondholders and could continue to be so. They
nonetheless considered that it was a scheme which they should support.
Mr Moore also relied on other features as providing a counterbalancing
benefit of some value. In particular, he relied on the release of
claims by bondholders against members of the Bondholders' Committee,
of which none has been made or is anticipated, and the settlement of
certain litigation by some bondholders against Telewest which involves
the withdrawal of the claim for no consideration other than the
payment of costs. In my judgment there is nothing in these features
which could justify discounting the significance of these two
bondholders' votes.
34. A further point taken in respect of the voting figures was that the
explanatory statement did not clearly draw attention to the fact that
the Average Exchange Rate differed significantly from the use in a
liquidation of a spot rate as of the date of liquidation. It was
submitted that if this difference had been made and that the use of
the Average Exchange Rate produced an unfavourable result for the
sterling bondholders, it may be that Deutsche Bank, Lionheart
Investment or other substantial holders of sterling bonds would have
voted against the scheme rather than voting in favour of it or
abstaining. This again is speculation. The opposing creditors have
adduced no evidence from any such bondholder to support it. Moreover,
I think that I am entitled to have regard to the fact that all the
known bondholders are sophisticated investors and dealers with access
to specialist legal advice.
35. Mr Moore submitted that, in any event, the use of the Average Exchange
Rate, as opposed to the spot rate on 30 April 2004 as the Record Date
for valuing claims, should result in the court refusing to sanction
the scheme. The pari passu principle applicable in a liquidation was
essentially a principle of justice between creditors and a scheme
which departed from it in a deliberate and quantifiable way was
inherently unfair. It was irrelevant that the scheme was on any view a
better alternative to a liquidation and that the use of the Average
Exchange Rate did not require separate meetings of the dollar and
sterling bondholders. It was submitted that the only fair way of
distributing the equity in the new holding company in place of the
bonds was pari passu in accordance with their claims, including
currency conversion at a spot rate ruling on the Record Date.
36. I do not accept this submission. The fact that the currency conversion
on the valuation date is an element of a truly pari passu distribution
does not mean that a different basis of currency conversion cannot be
fair. The volatility of currency markets can produce markedly
different results depending on the choice of valuation date. A formula
which aims to remove that risk and replace it with an average is not
in my judgment inherently unfair. I am satisfied on the evidence that
in proposing and agreeing the Average Exchange Rate, the Bondholders'
Committee and the company considered that it was a fair basis of
currency conversion and in my judgment they were entitled to reach
that conclusion.
37. It was further submitted that there was in this case specific
unfairness in the choice of an average rate over a period which began
at an earlier date and which created at the date of announcement in
December 2003 an exchange loss against which it was no longer possible
to hedge. However, it appears to me that the choice of period for the
average rate was made on rational grounds and the final outcome was
not known when the terms of the scheme were decided or announced and
could not be known for some months. More importantly, these are
considerations based not so much on legal principle as on the
particular features of the bond and currency markets. They are
therefore considerations on which the views of other bondholders are
particularly germane. As already seen, holders of substantial amounts
of sterling bonds in a similar position to the opposing bondholders
have voted in favour of the scheme.
38. I am satisfied that the scheme, taken as a whole and including the
Average Exchange Rate, is a scheme which an honest and intelligent
bondholder, whether holding sterling or dollar bonds or a mixture of
the two, could approve having regard to his interests. It is right to
have regard to the support for the scheme from a number of substantial
holders of sterling bonds, as well as to the overall result at the
meeting and to the votes of the sterling bondholders as a group. I am
further satisfied that there is no inherent unfairness in the scheme
such as would require the court to refuse its sanction to the scheme.
39. As a separate matter, on the day before the hearing the court received
a written submission from a shareholder, objecting to the terms of the
financial restructuring as it affects shareholders. They will receive
1.5 per cent of the equity of the new holding company. The proposals
have already been put to shareholders and approved by a resolution
passed at a general meeting of Telewest on 21 May 2004. The
shareholder complains of the actions of the directors and alleges that
the resolution was passed only by virtue of the votes of shareholders
who also hold bonds. The shareholder has not appeared to make
submissions or adduced evidence in support of his objections. These
points, as well as the lateness of his communication, makes it
difficult to deal with his objections. In any event, the scheme is not
proposed between Telewest and its members. If a shareholder alleges
that the resolution of the general meeting to approve the
restructuring is oppressive or invalid, he should raise the issue in
separate proceedings, rather than as an objection at the hearing to
sanction this scheme.
40. Accordingly, I shall make an order sanctioning the scheme involving
Telewest. The issues which have arisen on that scheme do not arise on
the scheme put forward by Telewest Jersey which has only dollar
bondholders. The scheme was approved unanimously at the meeting of
those bondholders and I will sanction it.