Daily Variety

October 22, 2003, Wednesday

Liberty Media's effort to secure control of UGC Europe, the continent's largest cable operator, was dealt a setback after UGCE shareholders late Monday rejected an offer to take the group private and fully consolidate it within Liberty's other international cable holding, UnitedGlobalCom.

Investors were disappointed in the exchange-ratio offer (nine shares of UnitedGlobalCom for each outstanding share of UGCE) to take UGC Europe private after its financial restructuring last month.

UnitedGlobalCom controls 66.7% of recently renamed UGC Europe, with the remaining 32% of UGCE shares held by former United Pan Europe Communications bondholders.

UGC Europe, the successor to UPC after it emerged from bankruptcy last month, has around 8 million subscribers in 11 European territories including France, Germany, Poland and the Netherlands. (UGC is primarily invested across Latin America.)

Liberty is in the process of taking full control of UGC and should own 96% of voting shares (75% of the economic interest) by the end of this year, which will see the entity fully consolidated on Liberty's books.

A special committee of UGC Europe's independent directors recommended that shareholders reject the tender offer by its parent UnitedGlobalCom to exchange, claiming the offer undervalued their position.

In a statement, the committee noted it is in the process of arranging for additional information from UnitedGlobalCom.

Analysts said Liberty is under no pressure to sweeten the offer, since its plans to spin off all its overseas distribution assets under a new trading stock have been shelved indefinitely.

Either way, Liberty remains in control of both entities and views them both as long-term investments.