Court approves Adelphia's plans to sell cable assets to pay creditors

October 23, 2004|By BLOOMBERG NEWS

Adelphia Communications Corp., the No. 5 U.S. cable operator, won court approval yesterday for an asset auction to raise money for creditors seeking more than $3 trillion.

Adelphia, which is based in Greenwood Village, Colo., plans to sell its assets in seven regional cable groups averaging about 750,000 subscribers each.

Comcast Corp. and Time Warner Inc. have said they might make a joint bid for the assets, which have an estimated value of $17 billion to $20 billion. Carl Vogel, chief executive of Charter Communications Corp., said last month that the fourth-biggest U.S. cable operator might bid on the assets.

"Bids will be entertained for a sale of the company as a whole or a series of transactions involving designated clusters of assets," Marc Abrams, a lawyer representing Adelphia, said in court papers. No auction date has been set, Abrams said.

U.S. Bankruptcy Judge Robert Gerber approved the auction rules at a hearing that was closed to the public. Adelphia lawyers asked Gerber to seal the courtroom.

Under bankruptcy law, debtors must win approval of an auction process before they can conduct an auction and sale. While no date has been set, Adelphia said in August that the auction process should be complete by the end of the year.

Gerber authorized Adelphia to reimburse the winning bidder or bidders for up to $3 million of their expenses. Adelphia can also pay a break-up fee if it agrees to sell its assets to a bidder and then scraps the transaction. Adelphia is allowed to keep secret how much it might have to pay.

Adelphia has signed more than 40 confidentiality agreements with prospective purchasers, Abrams said in court papers.

Adelphia founder John Rigas, 79, and son Timothy, 48, were convicted in July of conspiracy, bank fraud and securities fraud for looting Adelphia and lying about corporate finances before the company filed for bankruptcy protection. A U.S. jury in New York acquitted another son, Michael Rigas, of conspiracy and wire fraud. A third son, James, wasn't charged.

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