Adelphia, Bondholders Reach an Agreement

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After more than four years in what has often been a contentious battle, Adelphia Communications Corp. said July 24 that it has reached agreement with at least some of its dissident bondholders, bringing the cable company a step closer to shutting the books once and for all on its four-year bankruptcy saga.

Adelphia, which filed for Chapter 11 bankruptcy protection in June 2002, has already agreed to sell its assets for $16.9 billion in cash and stock to Time Warner Inc. and Comcast Corp. (see page 8). The creditor agreement will not affect the sale, which is expected to close today (July 31).

The agreement centers on how money coming from the sale will be distributed. According to Adelphia, several of its bondholders, unsecured creditors and several individual creditors have agreed to a distribution formula — its pre-petition bank lenders and some bondholders have not signed off on the agreement.

Nevertheless, Adelphia believes that it has enough consensus to issue yet another plan of reorganization (this will be its fifth) to let the bankruptcy go through. U.S. Bankruptcy Court Judge Robert Gerber still has to approve the agreement.

Adelphia did not give details of how much each class of debtors will receive, but said in a statement that roughly $1.08 billion will be distributed. The agreement is contingent on the asset sale to Time Warner and Comcast being consummated.

“This agreement will help pave the way toward a new, modified plan of reorganization,” said Adelphia chairman and CEO William Schleyer in a statement. Adelphia hopes to complete the bankruptcy sometime in the fourth quarter.