Adelphia's pre-Chapter 11 bankers ask court to end company's exclusive periods

By Jeff Pines

Washington, Feb. 26 - Adelphia Communications Corp.'s equity holders committee has company in asking the court to end the company's exclusive periods.

In two Feb. 26 filings with the U.S. Bankruptcy Court for the Southern District of New York, the company's pre-petition bankers asked for an end to the company's exclusive periods.

Adelphia owes its pre-petition lenders $6.8 billion through six credit facilities, and they do not like the treatment they will get in the company's draft reorganization plan.

The group of bankers believes the Greenwood Village, Colo.-based cable television company's creditors should have a choice of reorganization plans.

Like the equity holders committee, Bank of America, Bank of Montreal, the Bank of Nova Scotia, Citibank and Wachovia Bank believe four extensions is enough.

The equity committee estimates the company's assets could fetch $22.59 billion - $23.7 billion in an auction, and believes other cable operators rate Greenwood Village, Colo.-based Adelphia's systems as acquisition targets. For example, it cited Time Warner Inc.'s chief executive officer Richard Parsons as identifying the company as a potential target.

But the time to strike is now, the committee contends, because the market's view of the company's could change in a few months.

Meanwhile the bankers believe the company has wasted the last 20 months.

"Instead of building consensus among all creditors, they have apparently chosen to disregard the interests of the pre-petition secured lenders holding billions in senior secured debt in pursuit of a plan that is not viable," they said in the filing.

The group sees the plan as one-sided, benefiting a group of subordinated creditors, who, if the plan is approved, would become the new shareholders.

In fact, the bankers suggest Adelphia's management may be misleading the court by claiming it has "gained significant momentum," as it said in its motion requesting a fifth extension. The group said, "in fact the process has broken down."

Further, they note management sent them the draft on Feb. 12 and then refused to meet with them to discuss the plan before it filed it on Feb. 25.

BofA calls plan "nonconfirmable"

In its own motion, Bank of America said the plan "nonconfirmable." Bank of America is agent for a facility with Adelphia's Century Cable Holdings LLC. It wants Century auctioned off. Citing Comcast's recent offer for Disney, it believes a sale would "maximize the recovery for the creditors."

In a third filing, Credit Lyonnais' New York branch said the plan "purports to 'unimpair' the claims of the various pre-petition lenders," leave them incapable of voting and then hands the post-reorganization company over to the bondholders while withholding some payment to the lenders until the litigation is resolved. Unlike the other bankers, though, it is not calling for the outright end to Adelphia's exclusive period. But it does want the litigation and the reorganization resolved in tandem.

A hearing is scheduled for March 2.

Adelphia filed for bankruptcy on June 25, 2002. Its Chapter 11 case number is 02-41729.

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