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Posted on 06/25/2002 8:29:35 PM PDT by gulfwarvet
Adelphia Filing for Chapter 11 Bankruptcy Protection Tuesday
By Bill Bergstrom The Associated Press
Published: Jun 25, 2002
PHILADELPHIA (AP) - Adelphia Communications was in the process of filing for Chapter 11 bankruptcy protection Tuesday in the midst of financial troubles that have grown ever deeper and more tangled since the company revealed billions of dollars in off-the-books borrowing by the family of founder John J. Rigas, according to a source.
A source familiar with the matter, speaking on condition of anonymity, said the filing was under way Tuesday evening.
The nation's sixth largest cable television company had been scrambling to sell assets or lure investors to ease a cash crunch as the Securities and Exchange Commission and two federal grand juries investigated debts amassed by the Rigas family.
The filing came a week after the company missed $96 million in bond interest and preferred stock dividend payments.
Sources said last week the company had reached an agreement for a $1.5 billion loan, arranged by J.P. Morgan Chase & Co. and Citigroup Inc.'s Salomon Smith Barney division and spread among a large number of banks, that would allow it to continue operating while it reorganizes.
Adelphia's troubles came as similar allegations of off-the-books deals and questionable accounting were under a microscope at other companies.
At WorldCom Inc., the SEC was investigating loans to Chief Executive Officer Bernie Ebbers that were used for purchases of stock. And off-balance-sheet financing practices have been under scrutiny since the December bankruptcy filing of Enron, which used private partnerships to shift debt off its books.
Adelphia's stock was delisted June 3 by the Nasdaq Stock Market for failure to file financial reports, and the company fired its accounting firm, Deloitte & Touche, naming PricewaterhouseCoopers to replace it. The company also revealed that both subscriber totals and cash flow figures for the past two years had been overstated.
Leonard Tow, chairman of Citizens Communications and Adelphia's largest minority shareholder, resigned June 10 after two weeks on the board, saying he couldn't work on deals to stabilize Adelphia amid "ongoing serial disclosures of wrongdoing."
Adelphia reported to the SEC in late May that it appeared the company had guaranteed $3.1 billion in loans to the Rigas family, much of it used to buy now-devalued Adelphia stock. The company said even those figures may change because the Rigases refused to review or provide information for the filings.
The company divulged that the Rigas family for years had almost unfettered access to Adelphia's coffers, using company cash or assets to help it buy and run the Buffalo Sabres hockey team, expand the family's own personal cable company holdings, acquire timberland and invest in a golf course near the company headquarters in Coudersport in rural northern Pennsylvania. Many of the deals were never approved by Adelphia's board, the company said.
Adelphia remained delinquent in filing its annual 10-K financial statement, which had been due April 1. The company said a Deloitte & Touche audit to prepare the statement had been halted and the board's own three-member committee was directing an investigation of issues the audit raised.
In May, Rigas and his three sons stepped down from executive positions, and gave up seats on the board. The family also agreed to turn over $1 billion in assets and divert cash flow from family-controlled cable companies to try to help the company make debt payments.
Rigas was operating a small Coudersport movie theater in 1952 when a friend talked him into buying a franchise that delivered broadcast television signals, captured on a large antennae, via cable to rural subscribers. Rigas and his brother, Gus, gradually built the business, naming their company "Adelphia," Greek for "brothers." John Rigas bought out Gus Rigas' interest in 1983.
Adelphia stock, which was at $20.39 before the company first divulged the off-the-books debt in March, was valued at only 14 cents a share in over-the-counter trading Tuesday.
Adelphia's bankrupcy (BK) has been obvious for weeks. If Wednesday is a Black Wednesday, I'm reserving judgement, it will be because of MCI Worldcom's giant accounting fraud. The fraud was uncovered by KPMG, funny that Arthur Anderson did not uncover it (/sarcasm)
Forget a "return" on your investment:
be happy with getting your investment returned.
250 holy shiite, thanks for the info, and agreeing its all about Worldcom, Adelphia is old news (about a month old)
The market probably priced in an Adelphia Ch 11 weeks ago, where as the MCI WorldCom news is well brand new news. Typically only brand new news, suprises, move an efficient market like the U.S. equity market.
I agree that tomorrow will/should be ugly.
Some people (me) might call this "looting the treasury."
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