While investors wait for Adelphia Communications Corp. to provide more detail on its off-balance sheet-debt, one once-touted subsidiary — Adelphia Business Solutions Inc. — has filed for Chapter 11 bankruptcy protection.
Adelphia Business, also known by its ticker symbol of ABIZ, was spun off from the cable MSO into a separate entity in January. It filed for bankruptcy protection on March 27 in U.S. Bankruptcy Court for the Southern District of New York.
ABIZ also reached an agreement with Adelphia Communications and an affiliate of the Rigas family — Adelphia's largest shareholders — to provide up to $135 million in debtor-in-possession financing.
On a conference call with analysts, Adelphia Communications chief financial officer Tim Rigas said the MSO will contribute $67.5 million. The balance will come from Rigas family entities.
The DIP financing, which will provide operating cash, requires court approval.
ABIZ said it is also in negotiations with its boldholders. The telephony provider had previously said it would not be able to make about $15.3 million in interest payments that came due on March 29.
In a press release, ABIZ said it needed Chapter 11 protection, given the "virtual shutdown of the telecommunications capital markets and the decline in the telecommunications industry generally."
Adelphia once had high hopes for ABIZ, a unit it expected to provide business and eventually residential telephony service across the country. But as the telecom market began to collapse, ABIZ contracted. Initially, it expected to be in 175 to 200 markets, but it scaled back those plans in December 2000 to 75 to 80 markets.
By the end of 2001, ABIZ abandoned all of its expansion plans. It offered service in about 60 markets as of Dec. 31.
According to the Web site bankrupt.com, as of Dec. 31 ABIZ had assets of $944.75 million and liabilities of $1.44 billion.