Adelphia Communications Corp. set the wheels in motion for the planned spin-off of its competitive local exchange carrier subsidiary, Adelphia Business Solutions Inc., by declaring a stock dividend for all of its ABIZ shares.
On Jan. 11, the company will distribute the dividend to all holders of Adelphia Class A and Class B common stock of record as of 5 p.m. Jan. 8, it said in a Dec. 26 statement. Holders of Adelphia Class A and Class B common stock will receive a half-share of Adelphia Business Solutions, also known as ABIZ, for every Adelphia share they own.
As of Dec. 21, Adelphia had about 212 million shares of common stock outstanding and owned approximately 105 million shares of ABIZ common stock, or about 79 percent of ABIZ's outstanding shares.
All of Adelphia's Class B common shares — which have extra voting rights — are owned by members of Adelphia chairman John Rigas's family. It is expected that after the spin-off, the Rigas family will continue to have majority voting control of ABIZ.
Adelphia announced in November it would spin off ABIZ, a move that would eliminate about $1.4 billion of ABIZ debt from its books.
Another plan to cut debt by selling non-strategic systems with a total of about 770,000 subscribers has yet to be completed. In November, Adelphia said it hoped to be able to announce the sales within six months.
Adelphia was up 7.1 percent, or $1.96, to $29.76 on Dec. 26, because of the dividend and consolidation speculation stemming from the Dec. 19 announcement that AT&T Broadband and Comcast Corp. would merge in a $72 billion deal.
The stock continued to rise in subsequent trading, closing at $31.18 on Dec. 31. ABIZ stock was down 13 cents each to 46 cents per share on Dec. 26, but gained some ground later in the week to close at 58 cents on Dec. 31.