Ailing Adelphia misses payments

CEO sez co. is evaluating their business objectives

NEW YORK — Adelphia Communications disclosed Friday that it missed $44.7 million in interest payments, bringing it closer to the brink of bankruptcy, and said it was being investigated by two grand juries.

The cabler, which has been barraged by negative press on a daily basis, saw its stock suspended from trading last week after it failed to file an audited 2001 financial report. Execs met Thursday with the National Assn. of Securities Dealers, which regulates the Nasdaq market, about a threatened delisting but said no decision was reached.

If the stock is yanked from trading permanently, it would allow bond holders to force Adelphia to buy back $1.4 billion in convertible bonds.

Bankruptcy looms

That would be tough for cash-strapped Adelphia. The bond-interest default makes it more likely that a Chapter 11 filing is on the way.

“The company decided not to make these payments on outstanding bonds and preferred shares because we are now pursuing a thorough evaluation of Adelphia’s business objectives and financial requirements,” said interim CEO Erland Kailbourne.

He said Adelphia is still pursuing a sale of some cable assets, including valuable systems in Los Angeles.

Kailbourne took the helm last week after Adelphia founder, chairman and CEO John Rigas resigned. His son and Adelphia chief financial officer Tim Rigas stepped down a day later. The family-owned company ran into trouble last month after revealing several billion dollars in off-balance sheet loans to other entities also owned by the Rigas family in transactions that were seen as dangerously cozy.

Series of inquiries

The Securities & Exchange Commission is formally investigating the company, as are grand juries in the Southern District of New York and the Middle District of Pennsylvania. The company said it is cooperating with the inquiries.

Meanwhile, its woes are hitting others in the industry. Cablevision said Friday that it may be responsible for an accelerated $50 million interest payment relating to stock it owns in Adelphia. Cablevision sold its Ohio cable systems to Adelphia last year for cash as well as $422 million in stock through derivative contracts. The banks that underwrote the contracts could require the accelerated payment in case of early termination. But it could have been worse — the hedges protected Cablevision from huge losses as Adelphia stock tanked over the past month.

Cablevision said it has an existing credit facility that would cover the cost.