Orion Cable might get a reprieve

Deal for German cable operator expected Wednesday

U.S. suit could cut Germany's Orion Cable

COLOGNE, Germany -- A deal expected to close Wednesday will add a new twist to the heated battle for control of Germany's No. 3 cable operator Orion Cable.

Creditors of Orion's largest cable division Tele Columbus, which serves some 2 million customers in Germany, are expected to grant the operator a reprieve on its debt payments until February of next year. Tele Columbus is weighed down by €945 million ($1.3 billion) in debt, obligations that threaten the group with insolvency.

In exchange for approving the moratorium, the creditors are expected to demand debt-for-equity swaps that would allow them to buy up Tele Columbus and then sell it off.

Several groups, including Kabel Deutschland and Unitymedia -- Germany's first and second-largest cable operators -- are believed to be circling Tele Columbus, hungry for the company's customers.

Germany's Financial Times Deutschland reported on its Web site Tuesday night that an overwhelming majority of Tele Columbus creditors will likely approve the debt moratorium by Wednesday evening.

The deal would not affect Primacom, a separate German cabler controlled by Orion, which serves 1.2 million customers and is financially stable.

Nor would it change the situation at Orion's parent company, the Luxembourg-based Escaline, which is also threatened with bankruptcy.

Two hedge funds, Eos and Viathon, have filed suit in New York against Escaline demanding payment of €550 million ($780 million) in debts. Eos and Viathon are apparently betting the move will drive Escaline into insolvency and give them control of Orion and its German cable subsidiaries.