Cablevision Won't Bridge Gap with Stock


Cablevision Systems Corp. CEO James Dolan tried to squelch rumors that the
company was gearing up for a equity offering soon to bridge a perceived 2003
funding gap, issuing a statement Friday that a stock offering was not in the
company's plans.

'We have no plans to undertake a primary issuance of equity securities or
convertible equity securities,' Dolan said in a prepared statement Friday. 'Let
me state emphatically that Cablevision is also committed to living within our
means and to taking appropriate action in the near term to ensure that we do

Cablevision stock has hit four-year lows as investors worried that the
company would issue equity to bridge a perceived $400 million to $500 million
funding gap in 2003. In the past, Cablevision had said that a debt or equity
offering, as well as an asset sale, would be considered to close the gap.

Cablevision also outlined its exposure relating to its holdings in Adelphia
Communications Corp. stock. Cablevision received about $422 million worth of
Adelphia stock, or 10.8 million shares, as part of the $1.4 billion sale of its
Cleveland system to Adelphia in 2001.

According to the press release, Cablevision hedged against a drop in
Adelphia's stock price by entering into three derivative contracts with three
separate banks, whereby it received the $422 million in cash.

In the event of an early termination of those contracts -- which could be
triggered by events relating to Adelphia -- Cablevision would be required to
make interest payments estimated at about $50 million. The company said that
payment would be funded under its existing $2.4 billion credit facility.

Early termination also could result in a $300 million taxable gain for
Cablevision, which otherwise would have been payable upon maturity of the
contracts. The MSO said in the statement that its $1.7 billion of operating
losses would be enough to offset those gains.

If the contracts aren't terminated early, Cablevision can deliver Adelphia
stock and no other payments would be necessary.

Cablevision stock closed at $19.35 per share Friday, up