TELEWEST shareholders will be left with only a 1.5 per cent stake in the debt-laden cable company as the result of financial restructuring.

Telewest has reached agreement in principle with a group of bondholders to swap about £3.5bn in debt for a 98.5 per cent holding in the group.

The move, which is expected to reduce the group's debt from about £5.2bn to £1.7bn, has the support of the company's largest shareholders, including US firm Liberty Media, which owns 25 per cent of shares.

Telewest, which employs 500 people on Tyneside, made no comment on speculation that it could be about to switch its primary stock market listing from London to New York.

Such a move could open up the possibility of a tie-up with rival cable provider NTL, which is already listed in New York and recently agreed a similar debt-for-equity rescue package with its lenders.

Both companies ran up massive debts after spending billions on expansion during the technology boom.

At the end of July, Telewest reported that losses for the six months to the end of June had narrowed to £206m from £239m the previous year, while turnover was flat at £640m.

Telewest, which is based in Woking, Surrey, still has to meet conditions on the restructuring and reach agreement with its banks.

It is thought the process could still take some time to complete.

Telewest said that agreement has also been struck in principle with telecoms group IDT, which has a 23 per cent stake in the company after buying shares offloaded by Microsoft earlier this year.

In January, Telewest overcame a major hurdle when it secured a £2.2bn bank loan, allowing it to stay in business while it arranged the debt-for-equity swap.