A group of investors in a partnership organization that
invested in two California cable-television systems owned by Jones Intercable Inc. has
filed a class-action suit against the MSO, challenging the sale of the systems to an
affiliate of Jones.
City Partnership Co., the investor group, filed its
class-action suit in District Court in Arapahoe County, Colo., Dec. 24.
City Partnership owns an interest in two Jones cable
partnerships -- Cable TV Fund 12-C and Cable TV Fund 12 -- which, along with another
entity, Cable TV Fund 12-B, owned the two systems in Palmdale and Lancaster, Calif.
Jones sold the systems for $138.2 million to Jones
Communications of California Inc., an indirect subsidiary of Jones, Dec. 31. The sale was
one of many that Jones has made over the past few years, in an effort to bring its cable
systems under corporate control.
Jones has financed its cable systems in the past through a
series of similar partnerships. According to a filing with the U.S. Securities and
Exchange Commission last week, Jones said investors in the Palmdale and Lancaster
partnerships have received $2,064 for each $1,000 invested.
About $51 million of the money received in the sale was
used to repay the partnership's debt, Jones said in the filing. The rest of the money
-- $89.1 million -- was distributed to the members of the partnership in proportion to
their ownership interests in the cable systems.
The Cable TV Fund 12-B partnership received about $8.1
million from the sale. However, the company said about $1.5 million of that money will be
held in order to finance any litigation costs surrounding the suit.
The company said it is evaluating the City Partnership
complaint, and it will file a response by Feb. 10.
Jim Carlson, a spokesman for Jones, said suits of this
nature are common. However, he did not expect this suit or any similar suits to have a
material impact on the company.
Jones also said in the SEC filing that it is holding about
$1 million from another system sale for legal costs that are associated with a similar
lawsuit involving investors in a Jones system in Tampa, Fla.