Under pressure from creditors and facing a Monday court date that could force it to open its books to a potential buyer, Adelphia Communications Corp.’s board of directors threw in the towel Thursday morning, agreeing to explore a sale of the 5.4 million-subscriber MSO.
In a statement issued at 6:15 a.m. (EST), Adelphia said that although it would prefer to emerge from Chapter 11 bankruptcy protection intact, mounting pressure from creditors, which claimed that the company was undervaluing itself, forced its hand.
“We were pursuing a plan of reorganization that called for an independent Adelphia because we believed it was in the best interests of our bankruptcy constituents,” chairman and CEO Bill Schleyer said in a prepared statement.
“Increasingly, in our continuing dialogue with constituents after filing the plan, it became clear that a broad range of constituents preferred to allow the market to determine the appropriate value for Adelphia,” he added. “We have, from the start, worked in the best interests of the bankruptcy constituents, and we will continue to do so.”
In a prepared statement, Adelphia’s board of directors said that because the Denver-based MSO had not yet filed audited financial documents, unresolved Securities and Exchange Commission action against the company and the undetermined status of properties that were owned by its founding Rigas family but managed by Adelphia created a poor environment for a sale.
“The broad-based insistence, however, by the key bankruptcy constituents on exploring a possible sale of the company has caused Adelphia’s board of directors and management to now pursue a two-track process to find the optimal return for the bankruptcy constituents,” the board said in the statement.
In its reorganization plan, Adelphia had estimated its value at about $17 billion, or $3,200 per subscriber -- a figure that many creditors argued was too low. Bolstering that position was the unveiling earlier this month of a $625 million bid for an Adelphia joint venture in Puerto Rico with about 140,000 customers. At that price, those systems were valued at about $4,500 per subscriber.
The other partner in those systems, ML Media Partners, had claimed that Adelphia was trying to block the sale (which Adelphia denied) and asked the bankruptcy court to force Adelphia to open up the books for those systems. A hearing on the matter was scheduled for Monday.
While Adelphia could still emerge from bankruptcy as a whole company, several operators have expressed interest in the past. Adelphia’s largest system is in Los Angeles, and the MSO has other large operations in Cleveland, Virginia, New England and Ohio.
Possible suitors include Comcast Corp., Time Warner Inc. and Cox Communications Inc.