Adelphia charges some stakeholders with trying to kill stand-alone initiative

By Jeff Pines

Washington, June 18 - Adelphia Communications Corp. accused some of its stakeholders want to prevent the company from emerging from bankruptcy as a stand-alone company and are objecting to its proposed $8.8 billion exit facility to put up more roadblocks.

About two months ago, the Greenwood Village, Colo.-based cable television systems company said it would consider auctioning off its assets while it pursued its original plan of emerging from bankruptcy as an independent company.

Numerous stakeholders objected to the company's reorganization plan. These include the ad hoc convertible notes committee, the official equity holders committee, the ad hoc trade claims committee, the ad hoc senior preferred shareholders' committee, the official unsecured creditors' committee and Comcast JV Partners. They believe Adelphia's assets are worth far more on the auction block than as a stand alone company.

But to emerge from bankruptcy, the company needs the exit facility. In a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York, Adelphia's management called it "an insurance policy - at the lowest possible premium available - to ensure the viability of the stand-alone alternative."

The proposed fees would be about $64.4 million, which Adelphia said, as a percentage, is the bottom range of the fees approved by this and other courts.

The company rebutted its critics' arguments that paying fees for the facility would send the wrong message to potential bidders that Adelphia is not serious about selling its assets. Without the exit facility, the company would have no alternative to selling out, which means it might not get the best price for its assets, Adelphia said.

Adelphia also rejected the argument that locking in the exit facility now is premature, but the company believes now is the time to strike when it can get favorable terms and before interest rates rise.

As for the argument that paying the fees ties the company to a reorganization plan most stakeholders have objected to, the agreement clearly states a modified version of the plan is acceptable, Adelphia said.

The committees' last objection is that the lenders can easily opt out, leaving the company stranded and out the $64.4 million. Not so, the company said. If the lenders opt out, they will have to show the bankruptcy court that a material advance change was made in good faith, that there was a material adverse change in the markets and the change would make syndicating the loans extremely difficult.

A hearing on the exit facility is scheduled for Monday.

It has also drawn numerous objections in addition to - although generally from the same groups - as those that opposed Adelphia's original decision not to hold an auction.

On Thursday Adelphia said it had negotiated lower commitment fees for its proposed $8.8 billion exit facility.

Under the amendment, the company will not be liable for any fees until the court approves the facility and enters an order doing so. Under the original agreement, Adelphia began accruing fees on Feb. 24.

If the court approves the fees on June 21, Adelphia will save $17 million, the summary said. The savings comes from Adelphia no longer being liable for fees accrued from Feb. 24.

Another change is that the Greenwood Village, Colo.-based cable television company can terminate the commitment letter without being liable for a lump sum $10 million termination fee.

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

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