News

UnitedGlobalCom Eyes Argentine Systems

10/24/1999 8:00 PM Eastern

Buenos Aires, Argentina -- Top-level executives from
UnitedGlobalCom are expected to arrive here this week to discuss the purchase of cable
systems owned by Argentina's Supercanal Holding S.A., according to Jim Clark, the
Denver-based company's vice president of regional operations.

Although private negotiations between Argentina's No. 3 MSO
and the global cable giant have been taking place since April, no formal offer for the
company has been made, added Clark, who will be part of the delegation.

"Supercanal could offer an exciting opportunity to
develop broadband services, but whether a deal materializes depends on a number of
interests," he said.

An eventual deal would continue UGC's global expansion and
secure the company a greater foothold in Latin America.

Its largest investment in the region is in Chile, where it
owns leading MSO VTR Hipercable, with some 400,000 subscribers. Supercanal, with about
410,000 subscribers, controls a decent chunk of Argentina's 5 million-plus-subscriber
cable market.

While Supercanal's assets might be an attractive play to
any international cable buyer, the company's long-standing financial crisis has been known
to discourage more than a few potential bidders.

Since defaulting earlier this year on an $18 million
interest payment on $300 million in unsecured bonds, the list of white-knight investors
that could keep Supercanal on par with market leaders Multicanal and CableVisión has
dwindled.

Supercanal general manager Mariano Lucero confirmed that
UGC is the only firm candidate interested in a strategic investment. He declined to
comment further on the nature of the talks, adding only that no concrete offer had been
made for the company yet.

The Argentine MSO could be worth about $800 to $900 per
subscriber, or up to $369 million, according to one New York-based bond analyst.

Supercanal -- which has much smaller cable assets in three
other Latin American markets and Spain -- faces an arduous restructuring process with
bondholders and creditors, to whom it owes another $104 million.

According to bond-rating agency Fitch IBCA director
Augustine Okwu, negotiations with lenders are stalled pending the liquidation of the
company's assets.

Already wanting out are lead investor Grupo Uno, owned by
Argentina's Vila family, which controls 51.5 percent, as well as minority shareholder
Latlink, a property of the Cuban-American Mas Canosa family.

Multicanal, Supercanal's other main investor, has been
silent on the issue. The MSO, owned by local media conglomerate Grupo Clarín, declined to
comment on Supercanal's troubles despite speculation that it would be forced to increase
its 20 percent stake in the company, rather than letting it fall into bankruptcy.

Commenting on Supercanal's financial difficulties, Clark
said, "It's a complex situation, but hopefully, we'll emerge as a catalyst to solve
[Supercanal's] problems."

A deal would join both companies for a second time. In
1997, Denver-based UGC, previously known as United International Holdings Inc., sold its
Argentine operations to Supercanal for $225 million.

September