Adelphia equity committee takes another swing at company reorganization plans

By Jeff Pines

Washington, Feb. 6 - Adelphia Communications Corp. with assets valued at more than $18 billion does not need a work letter to negotiate $8 billion in exit financing, the official equity security holders committee believes.

In a Feb. 6 filing with the U.S. Bankruptcy Court for the Southern District of New York, the committee objected to the Greenwood Village, Colo.-based cable television company's motion to obtain approval to enter into a work letter in connection with exit financing.

As far as the equity holders are concerned, the assets of the company are worth far more on the auction block than if the company exits Chapter 11 this year. Adelphia filed for Chapter 11 on June 25, 2002.

Adelphia wants approval to negotiate the terms of the letter with Deutsche Bank Securities, Inc. The $8 billion would be composed of syndicated bank debt and bond debt.

In return for continuing its due diligence analysis and restructuring discussions, Deutsche Bank wants $150,000 to pay for costs and expenses.

To help it evaluate the need for the work letter, the committee asked management for essential details about the letter and information concerning discussions or negotiations with lenders. The company's response was to provide general information, which did not identify any other financial institutions they have been negotiating with, the committee said.

"Because of this lack of information, the equity committee cannot determine whether the debtors have exercised appropriate business judgment in deciding to enter into the proposed work letter at this time," it said.

As the committee made clear in a Feb. 5 filing with the court, Vanessa Wittman, Adelphia's chief financial officer, was quoted as saying the company has no obligation to the equity holders.

In return for management's cold shoulder, the committee wants the company's assets sold off. It believes Adelphia's cable television systems are so valuable selling them would bring in enough to pay off the creditors and leave money left over for the shareholders.

The hearing date is Feb. 11.

The case number is 02-41729.

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