New Issue: Adelphia upsized $300 million mandatory convertibles at 7.5% yield, up 18%

By Ronda Fears

Nashville, Tenn., Nov. 9 - Adelphia Communications Corp. sold $300 million of three-year mandatory convertible preferreds at par of 25 to yield 7.5% with an 18% initial conversion premium, via lead manager Goldman Sachs & Co. The Rule 144A deal, which was upsized from $125 million, sold at the middle of yield price talk and at the cheap end of premium guidance. Adelphia also sold 3 million shares of common stock at $21.50 each, which with the convertible offering fetched $907.5 million. And Adelphia chairman John Rigas and family injected another $202.6 million in capital into the company buy purchasing Series E preferred stock and Class B common shares.

Price talk had put the convertible pricing to yield 6.25% to 6.75% and the initial conversion premium at 21% to 26%. Coudersport, Pa.-based Adelphia, the sixth largest U.S. cable company, said proceeds would be used to repay subsidiary term debt, which may be reborrowed for general corporate purposes.

Adelphia also on Friday announced earnings and said it was spinning off its Adelphia Business Solutions Inc. unit. As a whole, Adelphia reported a third quarter net loss of $181 million, or 82c per share, which had narrowed from a net loss of $280.3 million, or 62c per share, in third quarter 2000. Total revenues gained to $898.6 million from $727.9 million and earnings before interest, taxes, depreciation and appreciation (EBITDA) grew to $357.1 million from $280.43 million. Adelphia Business Solutions posted a net loss of $75.8 million, which was narrower than $114.9 million a year earlier, with revenues growth to $116.3 million from $93.6 million and an EBITDA loss of $5.6 million versus an EBITDA loss of $24.5 million a year before.

The spinoff is expected to be complete by March 31, the company said.

Terms of the new convertible deal are:

Issuer: Adelphia Communications Corp.

Amount: $300 million

Lead managers: Goldman Sachs

Maturity Date: Nov. 15, 2004

Dividend: 7.5%

Issue Price: par of 25

Yield: 7.5%

Conversion Premium: 18%

Conversion Price: $25.37

Conversion Ratio: 0.9854

Call: non-callable

Settlement Date: Nov. 15

End

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