Adelphia eyes sale

Troubled cabler taps advisers for possible deal

NEW YORK — Bankrupt cabler Adelphia Communications tapped UBS and boutique firm Allen & Co. to manage a possible sale of the company, ending a search made more difficult by the fact that many Wall Street firms had tangled relationships with the company when it collapsed in 2002.

The selection of UBS, Allen & Co. and legal advisers Sullivan & Cromwell are subject to approval by U.S. bankruptcy court.

Adelphia decided to explore a sale in April after shareholder outcry over the low valuation the new management had put on the company as part of its plan to emerge from bankruptcy as an independent entity.

The reorganization plan valued the nation’s fifth-largest cabler at $17 billion, but analysts say a sale could fetch north of $20 billion, leaving the possibility of additional financial recovery for investors fleeced when the company filed for bankruptcy in 2002.

The potential sale is part of a two-track reorg process. The other track would have the cable company emerge as an independent entity later this year.

The management of the company has pay incentives tied to bringing the company out of bankruptcy as an independent company, but Adelphia CEO Bill Schleyer has said he will pursue the course that best serves the company’s creditors, which are mainly the senior secured debt holders.

“We are confident that this team will work closely with our management and board of directors to create the best possible outcome for our constituents,” he said in a statement.

Earlier this month the U.S. bankruptcy court approved an $8.8 billion financing commitment by JPMorgan Chase, Credit Suisse First Boston, Citigroup and Deutsche Bank to allow it to emerge from Chapter 11 bankruptcy protection as an independent entity.

A sale of the company is made more difficult by the fact that the company still doesn’t have audited financial results for 2002 or 2003 and the company is restating results from 1999 to 2001. Several former members of its accounting department pleaded guilty earlier this year to providing false information on the company to the public as part of plea agreements in the trial of the founding Rigas family.

Current management of the company has a team of 60 accountants going through 7 million journal entries to untangle the mess.

Nevertheless, Time Warner, Comcast and Cox have all expressed interest in all or part of Adelphia’s systems, which are scattered around the country but have large concentrations in upstate New York as well as Florida and Los Angeles.

Los Angeles system, the area’s largest, is the crown jewel of Adelphia’s holdings. The winner of that system would become the dominant player in the L.A. market, the nation’s second largest, which is now chopped up by a half dozen major cable operators.

Adelphia collapsed into bankruptcy after it revealed to investors that it had guaranteed $2.3 billion in co-borrowing loans to the founding Rigas family. Company founder John Rigas and son Timothy Rigas were recently found guilty of fraud and conspiracy in connection to Adelphia’s collapse and await sentencing. The trial of a second son, Michael Rigas, ended in a mistrial.

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