Debt Sinks Adelphia Stock

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Adelphia Communications Corp. stock sank to a new 52-week low Wednesday after
an analyst conference call raised questions about its off-balance-sheet
debt.

Adelphia stock plunged more than 18 percent, or $3.69 per share, closing at
$16.70 Wednesday.

During a conference call Wednesday morning to discuss its fourth-quarter
results, Adelphia revealed that it had about $2.3 billion in debt as part of
co-borrowing agreements with unnamed affiliates that the company could be
responsible for.

When Merrill Lynch & Co. high-yield debt analyst Oren Cohen asked how the
company was backing that debt -- other than cable systems with about 300,000
subscribers -- Adelphia management was at a loss for words.

'We're very comfortable that the debt can be paid off,' chief financial
officer Tim Rigas said on the call. 'We will try to see if we can give you more
clarity on that.'

Since the Enron Corp. bankruptcy last year -- the largest in U.S. corporate
history -- investors have punished companies that have shown questionable
accounting practices.

While no one is comparing Adelphia to Enron, the company's inability to
explain how it is backing that debt obviously hurt the stock.

'It's not going to take the company down, but it is more leverage than people
were aware of,' Cohen said. 'Now they're aware of it.'

At least one analyst tried to play down the significance of the
co-borrowings. In a research note, Salomon Smith Barney analyst Niraj Gupta
stressed that the debt is guaranteed by Adelphia, and it does not represent a
current obligation of the parent company except in a default at the partnership
level.

Gupta added that the systems contained in the partnerships have
more-than-sufficient cash flow to service the debt. 'We believe the concerns are
exaggerated,' he wrote.

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