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Adelphia update: WSJ SAYS DELISTING MEANS CREDITORS CAN ASK FOR 1.4 BILLION CASH, NOW.
- From: blitz
- Date: Sat Jun 01 04:33:02 2002
Don't hold your breath for Adelphia, theyr'e toast...
Adelphia update: Bankrupcy looms.
Insider report follows:
THIS IS ONE OF
THOSE DAYS WHERE THE LATEST NEWS IS A LITTLE OLDER. BY NOW I'M
PRETTY SURE ALL OF YOU SAW THAT THEIR STOCK CAN'T BE TRADED
ANYMORE....THE WALL STREET JOURNAL SAYS - AND THIS IS A FAIRLY NEW
ANGLE-- THAT NOW BECAUSE OF NASDAQ HALT ON TRADING, BONDHOLDERS CAN CALL
IN 1.4 BILLION IN DEBT. LIKE THAT SCENE IN "IT'S A WONDERFUL
LIFE," WHERE THEY WALK IN AND SCREAM GIVE ME MY MONEY NOW!!!!!!
TWO DAYFILE ITEMS:
1.) BOARD MEETING SATURDAY, EXPECT FIREWORKS BETWEEN
ERKIE AND LEONARD TOW, THE NEW GUY. stories below confirm he's not
happy. again, that's old news, though. although it now looks like tow
wants to be chairman of the company. and he tried to get backing
from board member Gelber. stage is set for a battle. NY Times did
2.) A STORY BELOW SAYS THAT THEY HAVE TO FILE SOME
SORT OF NEW FINANCIAL PLAN BY JUNE 15. ( if they don't file bankruptcy
AND ONE OTHER QUICK NOTE: MY PREDICTION ABOUT A
THURSDAY BANKRUPTCY IS KAPUT.... BUT WITH THE WSJ SAYING DEBT CAN BE
CALLED IN, AND WITH SALE TALKS TO CHARTER BREAKING DOWN, IT'S PROBABLY
Addendum: they BROKE down according to local news reports....(Buffalo,
NY, home of the Rigas family)
May 30, 2002 18:46 ET
Nasdaq to Delist Adelphia Communications Corp.
NEW YORK, May 30 /PRNewswire/ -- The Nasdaq Stock Market, Inc.
(Nasdaq)(R) today announced that it will delist the securities of
Adelphia Communications Corporation
ADLAE) based upon its failure to timely file its periodic reports
with the Securities and Exchange Commission as required by Nasdaq rules
and based upon public interest concerns.
The delisting will be effective upon the open of business on Monday, June
3, 2002, in order to provide for an orderly transition of index
components in the Nasdaq 100 Index.
Source: The Nasdaq Stock Market, Inc.
CONTACT: Scott Peterson of The Nasdaq Stock Market, Inc.,
May 30, 2002 05:39 PM
Dow Jones Business News via Dow Jones
WASHINGTON -(Dow Jones)- Brand-new Adelphia Communications Corp.
(ADLAE) board member Leonard Tow on Thursday asked that the company
refrain from selling its cable assets and repeated his request that the
company add Rudy Graf to the board.
Tow, the company's largest shareholder outside of the family of former
Chief Executive John J. Rigas, said he opposes the company's plan to
quickly sell the company's most valuable cable properties.
Tow, whose affiliates beneficially own 12.76% of the company's Class A
shares, said the company intends to complete the sale by Friday
Adelphia has been reported to be seeking a sale of
cable properties to Charter Communications Inc. (CHTR).Adelphia spokesman
Gary Holmes said the company had not yet seen the letter, which was filed
with the Securities and Exchange Commission on Thursday.
My guess is that we're not going to be able to comment on the filing,
Tow, whose appointment to the company's board was announced Tuesday, made
his requests in a letter dated Thursday to newly appointed Chairman and
interim Chief Executive Erland E. Kailborne.
(This story was originally published by Dow Jones Newswires)
Copyright © 2002 Dow Jones & Company, Inc.
May 30, 2002 19:58 ET
Adelphia Responds to Leonard Tow's SEC Filing
COUDERSPORT, Pa., May 30 /PRNewswire-FirstCall/ -- Adelphia
ADLAE) today issued the following letter to Dr. Leonard
May 30, 2002
160 Lantern Ridge Road
New Canaan, CT 06840
Dear Dr. Tow:
I was, as I am sure you
realize, surprised to receive your letter of earlier today. We have told
you that we would brief you on the asset sale proposals in detail at the
Board meeting Saturday. We have also explained the general goals and
progress to you orally. Your letter is the first suggestion that you felt
you needed more detail before Saturday.
Your letter is also the first indication that you object to the company's
need to address its liquidity issues through asset sales -- proposed
asset sales that I thought you fully agreed were essential to the
company's survival. We have asked you for any concrete proposal you have
as to how to restructure the company's debt. While I did not intend to
press you for any specific plan you might have until Saturday, in light
of your objection to the planned asset sales I would ask you to provide
me in as much detail as you are now able, what specific, concrete
alternative or alternatives you propose. You will, I know, understand
that general ideas without concrete details as to how they will be
implemented are of little use at this time.
Les Gelber has shared with me your proposal that you be elected Chairman
of the company. I certainly hope that your letter is, and your
participation as a member of the Board, will be directed towards what
will benefit all of the company's shareholders and not in pursuit of a
Incidentally, you earlier asked and were specifically told that no
transaction would be completed internally or otherwise before the Board
meeting. I cannot understand what purpose you believe is served by
including a knowingly false statement in a letter -- particularly a
letter that I understand you released to the press contemporaneously with
faxing it to me.
May 31, 2002
U.S. BUSINESS NEWS
Nasdaq Plans to Delist Adelphia,
Triggering Clause in Bond Deal
By DEBORAH SOLOMON and ROBERT FRANK
Staff Reporters of THE WALL STREET JOURNAL
Dow Jones, Reuters
Communications Corp. Cl A (ADLAE)
Communications Inc. Cl A (CHTR)
* At Market Close
The Nasdaq Stock Market said it will delist shares of Adelphia
Communications Corp. on Monday, striking a severe blow that analysts said
will likely land the nation's sixth-largest cable company in bankruptcy
The delisting of Adelphia, which has been trying to stave off such a move
for more than a month, triggers a clause that lets bondholders demand
$1.4 billion in cash. Such a demand would cripple cash-strapped Adelphia,
which has been frantically trying to sell assets and raise $1 billion in
Meantime, talks have broken down between Adelphia and Charter
Communications Inc., which was negotiating to buy one million cable
subscribers for $3.3 billion to $3.5 billion. People familiar with the
matter said Adelphia was asking for more than Charter was willing to
Go to the Called
to Account page1 for more coverage of issues worrying investors after
Auditor, Deloitte, Draws Regulators' Attention2
Scrambles for Funding as a Major Cash Crisis Looms3
Small-Town Coudersport, Pa., Adelphia CEO Rigas Is Still Hero4
Paid Founding Family Millions for Its Private Ventures
Nasdaq said in a statement that Adelphia's delisting is "based upon
its failure to timely file its periodic reports with the Securities and
Exchange Commission as required by Nasdaq rules and based upon public
Adelphia is under criminal and regulatory investigations by the Justice
Department and SEC for accounting practices, including self-dealing
between the company and its founding Rigas family. Nasdaq officials had
asked Adelphia two weeks ago for more information about the related-party
transactions that are under investigation. Last week, the company
detailed in an SEC filing how it doled out hundreds of millions of
dollars to the Rigas family to pay for everything from stock purchases to
Manhattan apartments. The Rigas family also borrowed about $3 billion
from Adelphia, half of which it used to buy stock in the company. The
Rigases have since resigned their management posts and relinquished four
of their five seats on the nine-member board.
The company has also missed several deadlines for filing financial
statements, including one Thursday. In addition to violating Nasdaq
rules, not filing timely financial statements violated agreements with
the company's creditor banks and enables them to force Adelphia into
bankruptcy. However, the banks granted Adelphia a waiver Thursday and
extended the deadline for filing until mid-June, according to people
familiar with the matter.
While it is unclear whether bondholders will force Adelphia to pay out
the $1.4 billion, analysts said it is increasingly likely given the
concerns surrounding Adelphia. The Coudersport, Pa., company must make a
missed $50 million interest payment by June 15 or risk default. An
additional $30 million interest payment is also coming due next month.
Separately, an already-tense battle is escalating between Leonard Tow, a
large Adelphia shareholder, and the company's board. Mr. Tow, who was
appointed to the board May 28, asked to be named chairman of Adelphia and
told the board he is concerned that a sale of cable assets could be
"devastating" to the company's future.
In a letter to Erland Kailbourne, Adelphia's chairman and CEO, Mr. Tow
said it is his understanding that discussions to sell assets are at an
advanced stage and that Adelphia is trying to complete a deal by Friday
night. He asked that any sale be delayed until he has time to review the
company's financial situation.
Mr. Kailbourne fired back his own letter, saying he was
"surprised" by Mr. Tow's comments and that Mr. Tow had
suggested privately that asset sales are the right move. Mr. Kailbourne
also said Mr. Tow was "specifically told that no transaction would
be completed internally or otherwise before the board meeting"
Talks continue with private equity firms, including Texas Pacific Group
of San Francisco, to invest as much as $1 billion in the company, monies
that would be secured by cable assets and repaid with a future sale,
according to people familiar with the talks. Private equity firms are
also looking at some of Adelphia's cable assets, including Providence
Equity Partners, a Providence, R.I., firm which specializes in cable,
telecommunications and media investments; Blackstone Group; Apollo Group;
and Cypress Group of New York. Talks are fluid, these people say.
-- Kara Scannell contributed to this article.
Write to Deborah Solomon at
Robert Frank at
URL for this article:
Hyperlinks in this Article:
Updated May 31, 2002
Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved
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Adelphia Gets Temporary Reprieve on $7 Bln Bank Debt Repayment
Coudersport, Pennsylvania: Adelphia Communications Corp.'s bank lenders
refrained from demanding the immediate repayment of as much as $7 billion
of debt for at least a week, averting an almost certain bankruptcy filing
by the sixth- biggest U.S. cable operator, people familiar with the
Bank of America Corp., Citigroup Inc. and more than 20 other financial
institutions are entitled under the terms of their lending agreement to
receive the full amount of their loans after Adelphia failed to produce
audited financial statements for 2001.
``Taking an extra week to review this very complex situation gives banks
a chance to further investigate what has happened,'' said Jonathan
Glaser, head of JMG Capital Partners, which holds Adelphia convertible
debt among its $1 billion in assets.
The lenders are giving Adelphia more time to resolve a cash crunch and
avoid bankruptcy so the company can try to sell assets or raise outside
capital, the people said. They also want their bankruptcy adviser,
Policano & Manzo, to verify the Coudersport, Pennsylvania-based
company's earnings, cash flow and other financial information, the people
said. Adelphia is seeking an asset-sale agreement to help convince bank
lenders it will have the cash to meet future obligations.
THE AP WIRE IN PENNSYLVANIA DID A LIFE IN COUDERSPORT STORY... I DON'T
HAVE ACCESS, BUT THE FIRST PARAGRAPH IS
COUDERSPORT _ Sitting in her downtown diner after serving lunch to
several Adelphia employees, Kaye Gerhart looks more than a little
worried. Financial trouble at the struggling cable provider already has
cut into her business. If the worst scenario happened and Adelphia
failed, I don't think this diner is strong enough yet to survive. I'm
afraid we'd be out of
May 30, 2002 11:11 AM Dow Jones Business News via Dow
WASHINGTON -(Dow Jones)- Adelphia Business Solutions Inc. (ABIZQ) has
withdrawn its request for final bankruptcy court approval of a $135
million debtor-in-possession loan from its former parent Adelphia
Communications Corp. (ADLAE) and an entity controlled by that company's
chairman and chief executive, according to a court filing Thursday. In a
separate filing Dow Jones Newswires also obtained, Adelphia Business said
it will discontinue certain local and long distance telephone services in
Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North
Carolina, South Carolina and Tennessee.
The company has sought bankruptcy court approval to sell some of its
accounts in these states to BellSouth Telecommunications Inc. for about
$750,000. (This story was originally published by Dow
ALSO FROM THE AP-- IN A STORY ABOUT TOW'S PROTEST OF
Kevin Kuzio, a bond analyst with KDP Investment Advisors, said banks
probably would be reluctant to immediately call in the loans, but noted
Adelphia also soon faces the expiration of a 30-day grace period on $44.7
million worth of debt payments it acknowledged missing in
We're getting close to the need for something to happen, Kuzio said.
By June 15, they need to have a financial plan together, some backing
from the banks or private equity to give them the liquidity they need to
make these debt payments.
like a plate of worms. There's all this stuff moving around. They have a
lot to deal with, Kuzio said.
May 31, 2002
Animosities Flare in the Struggle Over Adelphia
By GERALDINE FABRIKANT and ANDREW ROSS SORKIN
behind-the-scenes battle that has been raging for several days between
Leonard Tow, the largest shareholder of
Communications outside the Rigas family, and the company's board
culminated in an angry exchange of letters yesterday between Mr. Tow and
Adelphia's interim chief executive.
Mr. Tow, who has the support of a group of large institutional
shareholders, met with Leslie Gelber, a board member, on Wednesday and
asked to be named chairman. Mr. Tow, who owns about 10 percent of
Adelphia's stock, has already secured two board seats.
The board refused that request, and Mr. Tow sent a letter yesterday to
Erland E. Kailbourne, Adelphia's interim chief executive, protesting the
company's plan to sell "valuable" cable assets as soon as
today, contending that it was being done in an "atmosphere of
Adelphia is negotiating to sell cable systems with about 450,000
subscribers in Los Angeles and 550,000 subscribers in areas including
Georgia, South Carolina and North Carolina to the entrepreneur Paul G.
Allen, people close to the talks say.
Mr. Kailbourne sent a letter to Mr. Tow saying, "I cannot understand
what purpose you believe is served by including a knowingly false
statement in a letter — particularly a letter that I understand you
released to the press contemporaneously with faxing it to
Mr. Kailbourne also admonished Mr. Tow, telling him that his efforts
should be "directed toward what will benefit all of the company's
shareholders and not in pursuit of a separate agenda."
The vitriolic exchange came as Nasdaq said it would delist Adelphia's
stock because the company has not yet filed its 2001 financial report
with the Securities and Exchange Commission. Adelphia, which has been in
turmoil since March when it disclosed $2.3 billion in loans to the Rigas
family that were guaranteed by the company, has said it needs time to
restate several years of its financial reports to reflect the loans. The
delisting, to take place on Monday, could put the company in default of
some loan provisions, possibly requiring Adelphia to buy back $1.4
billion in convertible bonds in cash within 40 days.
New disclosures have put the loans to the Rigas family at $3.1 billion
and have revealed other questionable dealings between the company and the
family. As a result, all five members of the family have resigned from
the board and from management positions.
But with the disclosure of the dealings, the company's accountant,
Deloitte & Touche, and the outside directors have also been
criticized by analysts and corporate governance experts for failing
either to detect the dealings or to report them to the company's audit
committee. Some investors are calling for new management.
"It is critical that the company install an experienced cable
executive," said Gordon Crawford, a senior vice president at Capital
Research and Management, which owns nine million Adelphia shares.
But despite the shareholders' dissatisfaction with the current board, the
directors have no intention of giving control of Adelphia to a minority
shareholder who is not offering to pay a premium to take the company
over, people briefed on the situation said yesterday.
These people said Mr. Tow's corporate history made it particularly
unlikely the board would hand over control. Mr. Tow took over the
Citizens Utilities Company without paying a penny, critics say, by having
himself elected to the board and then pushing members off and replacing
them with longtime associates. Once in control of the board, which
included his wife — who is still a director — Mr. Tow received millions
of dollars more in compensation than that of other utility executives at
the time. And he made deals that shifted costs to Citizens, a cash-rich
company in which he had a negligible stake, and shifted fees to Century
Communications, a cash-poor company in which he owned a big stake. At the
time, the California Public Employees Retirement System sent the
company's directors a letter comparing them to "pigs at the
trough" for having allowed Mr. Tow such free rein. Citizens
Utilities was renamed Citizens Communications in 2000.
People close to Adelphia's board also said that Mr. Tow, in the letter he
released yesterday, misrepresented the sale of cable assets by saying it
could be completed by today. They said that the statement was simply
inaccurate and that the deal could not possibly happen that quickly.
It is not entirely clear what Mr. Tow's strategy is for Adelphia, aside
from his interest in taking control. In his letter, he argued for the
company to recover its footing before selling assets, although he does
not rule out such sales later on.
As a shareholder, Mr. Tow is in a desperate position. Equity investors
are the last to recover any money in a bankruptcy. And if Adelphia skirts
bankruptcy, any sale of a crucial asset weakens the company, and thus its
appeal to equity investors, because it removes valuable assets and cash
flow. A fire sale of assets is the least desirable solution, Mr. Tow
He may think that he is best able to negotiate with the banks to persuade
them to resume lending, a move that could provide time for a more
carefully planned sale of some assets, a person close to the talks said.
He may think that in an organized bankruptcy, a planned sale of assets
would bring better prices and even leave something over for equity
holders, one bondholder said yesterday.
Whatever his agenda, and that was not entirely clear yesterday, if the
company does strike a deal with Mr. Allen to sell cable assets, it is not
clear that Mr. Tow could stop such a sale. Stopping a sale would require
a majority vote on the seven-member board, people briefed on the
situation noted, and Mr. Tow has only two seats.
In terms of shareholder votes, the Rigases controlled 60 percent of the
votes through supervoting shares. In the wake of the current debacle, the
Rigases have agreed that those shares would be voted by a special
committee of outside directors.
My notes: The Rigas family is headed to prison, unless they have
sufficient resources to buy their way out of this debacle, which seems