Cable TV and telecoms company NTL has announced a �12.5m deal with Leicester City FC - the third time the company has invested in a Premier League club.

NTL's subsidiary Premium TV will lend the club up to �11.5m interest free, which it will be able to convert into a 9.999% equity stake after one year.

The company will also pay Leicester City �1m, in return for which it will act as the club's exclusive agent for media and commercial rights.

In addition, NTL and Leicester City say they are setting up a joint venture "to exploit opportunities on the internet".

NTL's football presence

Leicester is the third Premiership club to agree a loan deal with NTL.

Aston Villa and Newcastle United have also taken interest free loans from the firm, which can be converted into stakes of just under 10% in the clubs.

Steve Kind, Leicester's acting chief operating officer, said the cash raised from the deal would be used for a number of projects.

These include "strengthening the professional playing squad, development of the youth academy and training facilities, and the enhancement of stadium capacity".

Leicester City recently lost their popular manager, Martin O'Neill, to Scottish club Celtic and could have problems keeping some players.

Media battle

The deal comes as NTL and other media groups are jockeying for influence in the football industry.

Satellite broadcaster BSkyB has taken stakes in Manchester United, Leeds United, Sunderland and Manchester City. Granada has a similar deal with Liverpool.

The pattern of media companies taking small holdings in a range of clubs emerged after BSkyB's plan for a full takeover of Manchester United was blocked by the Department of Trade and Industry last year.

NTL is also locked in a battle with BSkyB over the TV rights to Premier League football.

The bidding for the rights closed on 10 May, but the Premier League has yet to make any announcement as to the outcome of the auction.