Beleaguered cable giant United pan-Europe Communications (UPC) has completed a series of transactions that gives it a Euros1bn loan and sees US entrepreneur John Malone take effective control of UPC's American parent UnitedGlobalCom.

The loan from Malone's Liberty Mediareplaces a rights issue that was proposed in February, but to which stock markets reacted negatively. Credit rating agencies said yesterday that they were concerned by the new deal as it replaced an equity programme with more debt. The Liberty loan, which is convertible into UPC shares at E8, will be used to pay off Euros750m of high interest debt.

Under the complex terms of the deal a new company will be set up New United, holding an initial 44% of UnitedGlobalCom shares. This could rise to 51% within the next 12 months.

Malone said that it was highly likely that Liberty will use UPC's chello high speed internet network to deliver additional services to cable networks in Germany. UPC already controls the Primacom network and is negotiating to buy six of the nine regional networks being sold off by Deutsche Telekom.

In February Liberty and UK private equity firm Klesch & Co signed a letter of intent with Deutsche Telekom, but it was reported last week that Liberty is now seeking to lower the purchase price. "Liberty continues to renegotiate... we certainly anticipate completing the transaction, but it isn't yet done,'' said Malone yesterday.