Rigas family said to agree to cede control at Adelphia

Two board seats, $2 billion in assets would be given up

May 23, 2002|By BLOOMBERG NEWS

COUDERSPORT, Pa. - Adelphia Communications Corp.'s founding Rigas family agreed yesterday to give up board control and transfer almost $2 billion in assets to the cable-television company, a person familiar with the matter said.

The assets will help offset $2.3 billion in company loans to the family that sparked a U.S. Securities and Exchange Commission probe. The Rigases agreed to cede two of their five seats on Adelphia's nine-member board, the person said.

Adelphia, facing U.S. grand jury investigations in two states and a possible Nasdaq delisting, still needs $1 billion in financing to avoid a bankruptcy until it can sell assets, the person said. Adelphia also is seeking a waiver from existing lenders after the company's failure to file an annual report put it in default on some bank debt, people familiar with the situation have said.

"There is a customary drill that people engage in as they move toward bankruptcy," said Martin Zohn, an attorney specializing in bankruptcy litigation at Proskauer Rose LLP in Los Angeles. "One is for the existing management to step aside. The other is for private equity or family members in a case such as this to pledge some additional support for the company."

Adelphia, the sixth-largest U.S. cable operator, is exploring three ways to raise money, the person familiar with the matter said: a short-term loan from existing lenders backed by assets to be sold, an investment from a private equity firm, and money from rivals such as Cox Communications Inc. that may want to buy Adelphia cable systems.

The company has approached equity investors such as Blackstone Group LP and Apollo Advisors LP for $1 billion in financing backed by cable assets, though an agreement is unlikely, The New York Times reported yesterday, citing people familiar with the situation.

Blackstone spokesman John Ford declined to comment.

Adelphia, with more than 5.8 million subscribers, said earlier this month that it will seek buyers for cable systems in California, Florida, Virginia and the Southeast to cut debt.

Company officials didn't return calls yesterday.

The Nasdaq Stock Market halted trading in Adelphia shares a week ago and may delist the stock because the company hasn't filed its 2001 annual report.

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