Adelphia Communications Corp. said it has suspended an independent audit of
its financial statements -- a move that could lead to a possible delisting of
its stock and trigger a default on portions of its bond debt.
Adelphia said in a prepared statement -- which also announced the resignation
of its cofounder and chairman, John Rigas -- that it was conducting an
investigation of 'issues raised in connection with the preparation of its 10-K
As a result, the company added, the ongoing audit by Deloitte & Touche
LLP has been suspended.
Adelphia also said it has retained David Boies and Washington, D.C.-based law
firm Boies, Schiller & Flexner LLP to advise it in connection with its
investigation and other matters.
According to analysts that follow the company, suspending the audit casts
doubt on Adelphia's ability to file its 10-K annual report with the Securities
and Exchange Commission by Thursday -- the same day Adelphia is scheduled to
meet with NASDAQ officials concerning a possible delisting.
Salomon Smith Barney cable analyst Niraj Gupta, in a research report issued
Wednesday morning, said the suspension of the audit 'raises serious doubts about
the company's ability to file its 10-K anytime soon.'
Gupta also downgraded Adelphia stock to 'neutral' and lowered his 12-month
price target to $3 per share, saying the risk of delisting is 'greatly
According to UBS Warburg LLC high-yield cable analyst Aryeh Bourkoff, a
delisting would trigger 'put' rights of certain holders of Adelphia convertible
debt, forcing the company to pay them as much as $1.4 billion in