Adelphia: $9.5B to Creditors

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Adelphia Communications Corp. filed a second amended plan of reorganization Saturday, which it said would return more than $9.5 billion to creditors.

Adelphia filed the amended plan June 25 in U.S. Bankruptcy Court for the Southern District of New York. A disclosure hearing is expected later this summer, followed by creditor balloting and a confirmation hearing to approve a final plan of reorganization.

The new confirmation plan is the first to be submitted after Adelphia decided to sell its cable assets to Time Warner Inc. and Comcast Corp. for $17.6 billion in cash and stock in a new entity, Time Warner Cable Inc. That deal, announced in April, is expected to close by the first quarter of 2006.

Creditors would receive a mix of cash and stock in Time Warner Cable as part of the new reorganization plan, with holders of Adelphia’s secured debt -- mostly banks -- receiving all cash.

According to the document, Adelphia will shell out about $9.3 billion in cash to creditors, while doling out about $200 million in Time Warner Cable stock. Still to be determined are the amounts to be paid to unsecured creditors -- including holders of its senior notes, which are owed $5.1 billion. However, Adelphia said that once those amounts are determined, those creditors will likely be paid in Time Warner Cable stock.

In a prepared statement, Adelphia chairman and CEO Bill Schleyer said the new plan represents continued forward progress toward the ultimate resolution of the bankruptcy.

“Throughout this process, maximizing value for our bankruptcy constituents has remained our most important goal,” Schleyer said. “We will keep the process moving ahead.”

Adelphia said it still expects significant negotiations with creditors under the new plan.

The company filed for Chapter 11 reorganization in June 2002 following an accounting scandal involving its founders, the Rigas family. Last week, former Adelphia chairman John Rigas and his son, former chief financial officer Timothy Rigas, were sentenced to 15 years and 20 years in federal prison, respectively, for their roles in that scandal.

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