Adelphia unit, Century, files bankruptcy; Adelphia convertible bonds sink to 15

By Ronda Fears

Nashville, Tenn., June 10 - Adelphia's subsidiary, Century Communications, filed bankruptcy Monday, which led to widespread confusion that caused some players to believe that Adelphia had filed as well. Adelphia has not filed bankruptcy itself, but most believe it is imminent - perhaps by the end of the week.

Several shops quit providing levels on the Adelphia convertibles late Monday because of the uncertainty about whether Adelphia had filed bankruptcy along with Century.

But two dealers quoted the Adelphia convertible bonds, the 3.25s and 6s, at 15. That would be about 9 points lower than the closing levels on Friday.

Adelphia shares closed in over-the-counter trading down 12c to 18c.

"The 15th is the cure period" for the interest payments on which Adelphia and its units are in default, said Credit Research & Trading analyst Allison Bellini.

"The rest of them are going to file by Friday. It's all over."

Adelphia did not return phone calls.

Some market watchers speculated that the Century filing was made due to the mounting animosity with board members Leonard Tow and Scott Schneider, both of whom resigned their seats Monday.

Tow, the chief executive at Citizens Communications Co., and Schneider gained a seat on the Adelphia board as a result of the Century acquisition in 1999. Tow and his affiliates hold a 12.76% stake in Adelphia.

Tow, who said his goal had been to restore the company's credibility and stabilize it financially, said in his resignation letter that "subsequent revelations of the unreliability of corporate data, as well as the ongoing serial disclosures of wrongdoing, have made it impossible to contribute meaningfully to the process."

It was May 28 when Tow and Schneider gained seats on the Adelphia board.

"We are disappointed that Messrs. Tow and Schneider chose not to continue their service as directors and help Adelphia resolve the challenges it faces," Adelphia said in a statement.

"Nevertheless, the company's independent directors, management and employees remain committed to preserving Adelphia's many strengths and restoring the company's credibility among its key stakeholders."

Also Monday, Adelphia fired its independent auditor Deloitte & Touche.

Valuation of Adelphia's assets and recovery levels for creditors, are still a matter of contention in the convertible market. Reports last week suggested the company overstated cable subscribers by 10% and kept two sets of accounting books.

Convertible market watchers were surprised when there were buyers for the Adelphia paper at 20.

"There were a lot of smart people in the market buying these at 20," Bellini said. "People who have a reputation of knowing something."

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