More Delays for Time Warner Cable Offering
By Mike Farrell -- Multichannel News, 1/28/2007 7:00:00 PM
A federal judge granted a group of dissenting Adelphia Communications bondholders a stay of the implementation of the cable company’s reorganization plan, a move that could delay the issuance of a separate Time Warner Cable stock for another five weeks.
U.S. District Judge Shira Scheindlin awarded the bondholder group a stay as it put together its appeal of Adelphia’s reorganization plan on Jan. 24. But as part of her ruling, Scheindlin also required a $1.3 billion bond, 10% of which was due within 24 hours of the ruling. The bondholder group, which includes Banc of America Securities and a unit of Lehman Bros., had three days from the order date to come up with the rest.
On Jan. 25, federal appeals court judge Robert Katzmann, though, temporarily suspended Scheindlin’s bond requirement, according to a Bloomberg News report.
Although the bondholders won’t have to come up with the cash just yet, it will not have any effect on the appeals process, which could take another five weeks. Under Scheindlin’s order, briefs from the bondholders are due in two weeks, and Adelphia gets another two to respond, Bloomberg reported. The bondholders then get another week to reply.
Adelphia’s fifth reorganization plan was approved by U.S. Bankruptcy Court Judge Robert Gerber Jan. 5, and the bondholder group filed its objection four days later.
Last week, Adelphia, which has been in bankruptcy for four years, asked Scheindlin to require a $3 billion bond on those appealing the plan.
The bondholders then answered with a $10 million bond proposal and said that if Scheindlin saw that as insufficient, they would file their appellate brief by Jan. 26 and accept her decision as final.
The bondholders have objected to the value Adelphia is placing on the Time Warner Cable shares that will be distributed to creditors as a result of Time Warner Inc.’s joint purchase of Adelphia with Comcast. As part of the $17.4 billion deal, creditors will receive $12.5 billion in cash and a 16% interest in Time Warner Cable.
The delay means a public Time Warner Cable stock, which has been trading on a “when-issued” basis since Jan. 5, will have to wait. It was believed that the stock could begin trading on the New York Stock Exchange as early as the end of January.
Although Time Warner Cable filed documents with the Securities and Exchange Commission in October for an initial public offering, the preferred method of taking the cable unit public would be folding it into the already-traded Adelphia shell.
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