IT was only a few weeks ago that I sat down to lunch with Steve Birch, who was then chief executive of Virgin Media. He was at pains to share the issues facing the cable company, the opportunities and the potential to take further costs out of the business created by combining the indebted cable groups NTL and Telewest with Virgin Mobile.

He declined to be drawn on potential takeover talks – although only a few days later the company confirmed it had received an approach. At that time Birch showed no sign of wanting to resign from the Nasdaq-listed company.

How times change. Last week he did just that and picked up a £3.4m severance package. Had the company been taken over that figure could have been worth £15m. But Birch had had enough. The corporate patter he had shared over lunch masked some deep divisions within the company, particularly with his US-based chairman Jim Mooney and one of the group’s biggest investors, Bill Huff.

If the takeover talks had proceeded Birch would have undoubtedly kept his head down. But with highly leveraged deals now off limits, potential bidders – including Carlyle and Blackstone – were told to stand down. As a result the breakdown on the board became a serious issue again.

Huff and Mooney appear unable to accept that while cable is the consumer’s first (and in many cases only) choice in America, in Britain the landscape is different. Here cable faces a challenge from satellite group BSkyB, and very strong commercial broadcasters.

Cable has a future in Britain, but Huff and Mooney have to let the UK executives, based in Hook, Hampshire, sort it out. That job is now temporarily being led by Neil Berkett, a New Zealander who joined two years ago as chief operating officer.

It is up to Virgin Media’s nonexecs to ensure he is given the time and is not bullied into submission by his American paymasters. For that to happen, individuals such as David Elstein, former head of programming at BSkyB and chief executive at Channel Five, and Gordon McCallum (the Virgin representative on the board) must be prepared to back him.

For a company whose earnings are generated in the UK, there is a heavy component of US nonexecs and some of them, such as Edwin Banks, have had strong working relationships with Huff.

The benefit of Virgin Media being taken private would mean the surgery required to achieve success could be achieved out of the public eye. In the short term that is not possible, but the priority now must be to demonstrate there is a united board supported by its investors.

With 15m customer contracts for mobile, fixed-line, broadband and paid television, Berkett must now deliver at the operational level. The first signs of that were shown with the second-quarter results – but in a highly competitive landscape more needs to be done.

Glory to the brave

THE first week of September is normally a busy one for debt markets with traders and dealmakers arriving back from holiday eager to plunge into work. There is a good reason for this: the early bird gets the worm. The deal teams that are quickest off the block in September normally get the best prices for the loans they need to sell.

This year, it will be different. Rather than charge into the market, dealers will be ultra-cautious. After the liquidity crunch of recent weeks, lenders are still nervous of advancing their money to anything that looks even remotely risky, and they will certainly want an increase in prices if they are going to play ball.

Those looking to syndicate loans – parcel them up and sell them to a range of lenders – face a tricky judgment call. If you are brave, you might fail to get the deal away and end up with egg all over your face. But if you don’t push ahead, you are left carrying costly loans long after they should have disappeared off your books – and you will probably miss the best prices.

That’s why debt markets are awaiting the first week of September with such eagerness. Until then, no-one will really know whether the current gyrations in the credit markets were just a phase, or a longer-term problem. All eyes are on two deals – the syndication by five banks of the £10 billion in loans arranged to finance KKR’s acquisition of Alliance Boots, the chemist, and similar syndication of the money raised by Blackstone to buy Hilton Hotels in America.

Predicting what will happen is a bit like forecasting the weather, but most of the lending experts I talk to seem to think there will be a slow return to business as normal. Normal, in this case, means the market conditions that held sway a year ago, with the silly pricing and covenant-lite deals that were the hallmark of an out-of-kilter market in the early months of this year disappearing for the foreseeable future.

Come on, referee

THE possible intervention of the Competition Commission to referee the mooted takeover of J Sainsbury, the food retailer, by Delta Two, a Qatari-backed investment vehicle, is a genuine threat. The commission wants to ensure Delta Two injects sufficient equity into its bid.

There is nothing Tesco, Asda and Wm Morrison would like better than a wounded and highly leveraged rival. Delta Two has no intention of making this happen, but it must quickly demonstrate this to the commission. A six-month inquiry would be a waste of time.

john.waples@sunday-times.co.uk

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