Copyright 2002 Reed Elsevier Inc.

Daily Variety…06/24/2002

From LexisNexis

NEW YORK —Adelphia Communications Corp. is said to have lined up $1.5 billion in financing through a consortium of banks, much-needed cash that will keep its businesses operating while it restructures after a Chapter 11 filing expected today.

Salomon Smith Barney and J.P. Morgan Chase will arrange the financing along with a number of other institutions, possibly including General Electric Capital, Bank of America, Bank of Nova Scotia and FleetBoston.

Raising that amount of money can sometimes require the participation of as many as 50-100 banks, Wall Streeters said. Lining up the right partners has delayed a bankruptcy filing as the cable company's stock disintegrated and it defaulted on more than $7 billion in interest payments.

But despite Adelphia's financial woes, its cable systems, with more than 5 million subscribers, continue to generate cash. The near-monopoly enjoyed by most cablers in their markets, including Adelphia, makes the ailing business' situation unique.

"If your local Kmart closes, you can go to Wal-Mart or Costco. With cable, many people have no alternative," said Ivan Kallick, a lawyer and bankruptcy specialist with L.A. firm Manatt, Phelps & Phillips. (Kmart filed for bankruptcy earlier this year.)

A bankruptcy court will also serve as a clearing house for litigation as probes and lawsuits abound. The Securities & Exchange Commission and two grand juries are investigating the company, and numerous shareholder class-action lawsuits are being consolidated.

Adelphia's interim management, made up of a committee of four independent directors, is investigating a host of accounting irregularities involving the Rigas family, which founded Adelphia and ran it until recently. Depending on the committee's findings, a restructured Adelphia could consider legal action against the Rigases, though the suits are likely to take years to settle.