Cable Operators

Fall of the House of Rigas: A Timeline

Public Saga Began on March 2002 Earnings Call 6/24/2005 8:00 PM Eastern

Last week’s sentencing of former Adelphia Communications Corp. founder, chairman and CEO John Rigas to 15 years in prison for securities and bank fraud and of his son, Timothy, the former chief financial officer, to 20 years was another milestone in a case that began innocuously enough with a fumbled answer during a routine quarterly conference call with analysts. A log of key dates follows:

 

March 27, 2002: In its first-quarter conference call with analysts, Adelphia reveals it could be liable for $2.3 billion in co-borrowing debt with Rigas family entities. On the call, CFO Tim Rigas assures analysts that the family has enough resources to back up the debt, but is unconvincing.

 

March 28, 2002: Adelphia continues to nosedive, falling another $1.80 per share to $14.90, after dropping $4 to $16.70 on March 27.

 

May 14, 2002: NASDAQ suspends trading in Adelphia, which last traded at $6.13.

 

May 15, 2002: Adelphia and subsidiaries miss $44.7 million in interest payments on senior and convertible notes.

 

May 17, 2002: Adelphia reveals it is the subject of grand jury investigations in New York and Pennsylvania.

 

May 18, 2002: Adelphia proposes selling systems in Los Angeles, Florida, Virginia, the Carolinas and Georgia to raise money to pay down debt.

 

May 19, 2002: Adelphia announces that James Brown, vice president of finance, has resigned.

 

May 23, 2002: John, Michael, James and Timothy Rigas resign from Adelphia’s board of directors and as officers of the company. The Rigases agree all company stock held by the family will be placed in a trust. Adelphia increases the amount of co-borrowing debt to $2.5 billion. Adelphia board member Erland Kailbourne becomes interim chairman.

 

June 11, 2002: Peter Venetis, John Rigas’s son-in-law, resigns from Adelphia board.

 

June 25, 2002: Adelphia files for Chapter 11 bankruptcy protection.

 

July 24, 2002: John, Tim and Michael Rigas are arrested by U.S. Postal Inspectors in New York; Brown and Michael Mulcahey (former assistant treasurer) are also arrested, in Williamsport, Pa. Additionally, the Rigases are named in civil lawsuits filed by Adelphia and the Securities and Exchange Commission.

 

Aug. 23, 2002: Adelphia’s $1.5 billion debtor-in-possession financing is approved.

 

Sept. 23, 2002: The Rigases, Brown and Mulcahey are indicted on 23 federal counts of fraud and conspiracy.

 

Nov. 14, 2002: Brown, hoping to receive a more lenient sentence, pleads guilty to conspiracy, securities fraud and wire fraud, and agrees to testify for the prosecution.

 

Jan. 17, 2003: Adelphia names former AT&T Broadband executives William Schleyer and Ron Cooper as chairman and CEO and president and COO, respectively.

 

March 28, 2003: The bankruptcy court approves Adelphia’s plan to move headquarters from Coudersport, Pa., to Denver.

 

Feb. 23, 2004: Jury selection in the federal fraud trial of the Rigases and Mulcahey begins.

 

Feb. 25, 2004: Adelphia receives $8.8 billion exit-financing commitment from four banks and files reorganization plan in bankruptcy court.

 

March 1, 2004: Trial begins in Manhattan.

 

April 22, 2004: Adelphia, pressed by creditors, agrees to pursue a dual-track strategy of emerging from bankruptcy as a whole entity while also exploring a sale of its assets.

 

April 29, 2004: Brown, the government’s star witness, begins the first of 14 days of testimony.

 

June 2, 2004: Mulcahey, the only defendant who will take the witness stand, begins seven days of testimony.

 

June 28, 2004: Jury deliberations begin.

 

July 8, 2004: Jury finds John and Tim Rigas each guilty on 18 counts of conspiracy and securities and bank fraud, but not guilty on five counts of wire fraud. Michael Rigas is found not guilty on one count of conspiracy and five counts of wire fraud, but the jury remains undecided on 17 counts of securities and bank fraud. Mulcahey is found not guilty on all counts.

 

July 9, 2004: A mistrial is declared in the case of Michael Rigas on the 17 counts of securities and bank fraud.

 

July 14, 2004: Adelphia hires UBS Investment Bank and Allen & Co. as advisors for a possible sale.

 

August 20, 2004: Adelphia files papers with the U.S. Bankruptcy Court in Manhattan asserting that the Rigas family owes the MSO more than $3.2 billion; a hearing is scheduled for October 22.

 

Sept. 21, 2004: Adelphia splits itself into seven separate clusters, making it easier for potential bidders to make offers for parts of the company.

 

Oct. 26, 2004: U.S. District Court Judge Leonard Sand agrees to drop the bank-fraud charges against Michael Rigas.

 

Oct. 31, 2004: Deadline for preliminary bids. More than 50 interested parties submit bids, including a joint bid from Time Warner Inc. and Comcast Corp.

 

Nov. 1, 2004: U.S. District Court Judge Leonard Sand approves a retrial for Michael Rigas on the securities-fraud charges.

 

Dec. 14, 2004: The Justice Department asks a judge at the U.S. District Court for the Southern District of New York to enter a $2.53 billion judgment against John and Tim Rigas.

 

January 5, 2005: John and Tim Rigas are scheduled to be sentenced, but sentencing is postponed. It will continue to be postponed numerous times between January and June.

 

Jan. 31, 2005: Final bids on Adelphia systems due.

 

March 21, 2005: Time Warner finalizes a $300 million settlement with the U.S. Securities and Exchange Commission concerning accounting irregularities at its America Online unit. The move will allow Time Warner to issue stock again.

 

March 24, 2005: Adelphia proposes settling claims by SEC and DOJ for $725 million.

 

April 5, 2005: Cablevision Systems Corp. reportedly lobs in a $16.5 billion all-cash offer for Adelphia’s cable systems.

 

April 8, 2005: Adelphia reaches agreement in principle with Time Warner Inc. and Comcast to sell its 5.2 million cable subscribers for between $17.6 billion and $18 billion in cash and stock.

 

April 25, 2005: Adelphia settles fraud charges with the SEC and DOJ, agreeing to pay $715 million in cash. The move clears the way for the MSO’s pending sale to Time Warner and Comcast, and removes the threat of prosecution. As part of the agreement, the Rigas family has agrees to surrender about $1.5 billion in assets to Adelphia, including its interests in various cable properties.

 

June 20, 2005: Judge Sand sentences John Rigas to 15 years and his son Tim Rigas to 20 years for their part in what the judge called “one of the greatest frauds in corporate history.”

 

Sept. 19, 2005: John and Tim Rigas are to report to begin their prison sentences.

 

October 15, 2005: The retrial of Michael Rigas on 15 counts of securities fraud is scheduled to begin.

 

Source: Multichannel News research

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