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Adelphia seeks sale by year-end

Thu, 08/05/2004 - 8:00pm
George Mannes

Copyright 2004 TheStreet.com, Inc.

TheStreet.com

August 6, 2004 Friday 9:30 AM Eastern Time

Adelphia Communications (ADELQ:OTC BB) said it hoped to complete a sale of all or part of its operations by year-end.

The bankrupt cable operator said UBS Investment Bank and Allen & Co. will manage the sale process under the direction and control of the company's board. The auction will start in earnest after Labor Day, Adelphia said.

Adelphia said its advisers "have been engaged in informal discussions with potential bidders," who weren't named. The company said it would solicit bids both on the whole company and on parts of it. Preliminary indications of interest will be due in October.

"In an effort to build the greatest possible value for the Adelphia Chapter 11 bankruptcy estate, we announced on April 22 that Adelphia would consider a sale of the company," said CEO Bill Schleyer. "Since then, we have been working diligently to assemble the appropriate advisors, information and documents needed for a robust and fair sales process to maximize the value of Adelphia to the company's stakeholders."

Adelphia, the nation's fifth largest operator of cable TV systems, filed for bankruptcy protection in 2002, following revelations that the company was potentially on the hook for $2.3 billion in borrowings by the family which had controlled Adelphia for decades.

Adelphia Founder John Rigas and one of his sons, former CFO Tim Rigas, were found guilty last month of fraud and conspiracy charges related to their activities at Adelphia.

Another son, former executive vice president Michael Rigas, was cleared of some charges but had a mistrial declared on others. A fourth former executive, onetime assistant treasurer Michael Mulcahey, was found innocent on all counts.

Simultaneous with the criminal trial, participants in Adelphia's bankruptcy proceedings have battled over the fate of the cable operator, whose headquarters have been relocated from the Rigas family's hometown of Coudersport, Pa., to Greenwood Village, Colo.

Adelphia's new management, led by Chairman and CEO Schleyer, had been pushing to have the company exit bankruptcy as a free-standing entity. But some debtors, along with Adelphia's current equity holders, have argued that Schleyer's team has understated Adelphia's value, and that holders of Adelphia's securities would reap more money if the company's assets were sold directly out of bankruptcy.

Bowing to these arguments, Adelphia's management announced in April that it would explore the possible sale of the company. Last month, the company hired UBS and Allen to conduct the auction.

But progress in such a sale has been elusive, a major stumbling block reportedly being that so many Wall Street players are involved in Adelphia-related litigation.

Cox (COX:NYSE), Comcast (CMCSA:Nasdaq) and Time Warner (TWX:NYSE) have been seen as likely candidates to buy at least part of Adelphia. But that picture may have changed with Cox earlier this week receiving a bid from its controlling shareholder to take the company private.

On Friday, Adelphia shares were at 40 cents.

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