Nasdaq pulls Adelphia plug

Delisting hearing to come as co. probes annual report

NEW YORK — Adelphia Communications founder and controlling shareholder John Rigas resigned as chairman-CEO Wednesday, and the cabler’s stock was halted from trading on the Nasdaq market after the company missed another deadline to file an audited 2001 financial report.

Moves came ahead of a delisting hearing. With no shares trading, analysts at Salomon Smith Barney and Wachovia Securities belatedly lowered their ratings on Adelphia stock from, respectively, “buy” to “neutral” and “strong buy” to “market perform.”

Further muddying the waters, Adelphia said it is investigating issues raised in connection with the preparation of the long-overdue annual report. The nation’s sixth-largest cabler suspended an audit of the report currently under way by its accounting firm Deloitte & Touche while it conducts its own internal inquiry.

The SEC also is investigating the company, which imploded last month after revealing several billion dollars worth of off-balance sheet loans that spooked investors and sent the stock into a free fall. Markets post-Enron have become ultra-wary of aggressive accounting and lack of financial transparency.

Kailbourne steps in

Rigas was replaced by independent Adelphia board member Erland Kailbourne, a former top exec at Fleet Bank. He was named interim CEO.

“After much thought and prayer about what will best serve the needs of the company … I have concluded that Adelphia needs fresh, independent leadership and that after half a century at the helm, the time is right for me to step down,” Rigas, 77, said in a statement. He will keep a seat on the board, which also includes two of his sons and one son-in-law.

Earlier this week, major shareholder Leonard Tow said he plans to exercise a contractual right to appoint three directors to Adelphia’s board — himself and two execs of his company, Citizens Communications.

As the bad news continues to pour in, speculation is growing that Adelphia may have to file for bankruptcy. On Wednesday, ratings agency Moody’s Investor Services downgraded Adelphia’s bank debt, citing the uncertainty surrounding the company.

Adelphia has put a number of cable operations up for sale to raise some cash, including valuable systems in Los Angeles. But interested buyers may have a tough time negotiating a deal without an audited financial statement to work from.

Adelphia shares closed Tuesday at $5.70. They’ve lost half their value over the past six weeks.