Equity Group Calls for Outright Adelphia Sale

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Just days before Adelphia Communications Corp. is scheduled to file its Chapter 11 reorganization plan, a group of equity holders in the Denver-based MSO has called for an outright sale of the company.

In a filing with the U.S. Bankruptcy Court for the Southern District of New York Thursday, Adelphia’s official committee of equity security holders asked the court to terminate the MSO’s exclusive period to file a reorganization plan, setting the stage for other parties -- including the equity committee -- to file competing plans of reorganization.

In the document, the equity committee said its plan would consist of an "auction and sale of the operating assets in an open, fair and competitive process in order to maximize recoveries for all of Adelphia’s constituencies."

In its statement, the committee added that such a sale would result in proceeds billions of dollars in excess of Adelphia’s debt. The company is currently carrying debt of $18.7 billion, which is expected to rise to $20.6 billion by Sept. 30, according to the committee filing.

Citing data from independent appraisers, the committee estimated that the Adelphia systems could fetch $22.6 billion-$23.7 billion. That would leave $2 billion-$3 billion to be distributed to existing shareholders.

Possible buyers include cable giants Time Warner Inc., Cox Communications Inc. and Comcast Corp., as well as private financial groups, the filing stated.

Adelphia has until Feb. 17 to file its reorganization plan. Although the MSO has received extensions to file that plan before, several observers have said they expect a reorganization plan to be filed this month.

Late last month, Adelphia asked the court for permission to negotiate with Deutsche Bank Securities Inc. concerning an $8 billion loan to help it emerge from bankruptcy. As part of that filing, Adelphia said it envisions its reorganization plan leaving nothing to existing shareholders.

That is probably what forced the equity holders -- the largest of which is Citizens Communications Corp. chairman Leonard Tow -- to file the most recent motion.

But that point may be moot if Adelphia files its reorganization plan on time. The court has set a March 2 date for a hearing on the motion -- two weeks after the deadline for Adelphia to file its exclusive reorganization plan.

In a prepared statement, Adelphia said it will oppose the equity committee’s motion because it is not in the best interests of shareholders.

The company said it plans to file its reorganization plan with the court before the end of the first quarter. The MSO added that its constituents will be best served by its "successful emergence from bankruptcy and continued operation as an independent entity."

Adelphia has said that it expects to emerge from bankruptcy protection in the second half of the year.

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