New York -- Attorneys for John and Timothy Rigas hammered away at former Adelphia Communications Corp. director Dennis Coyle Tuesday, appearing to punch some holes in his testimony regarding co-borrowing agreements between the MSO and several Rigas family partnerships.
Coyle had testified Monday that based on the small amount of assets in the Rigases’ partnerships that were backing up about $2.28 billion in loans, the Rigases were in violation of loan covenants.
Coyle said leverage ratios for loan agreements at the Rigas partnerships -- required to be in the 6.5-times-cash-flow range -- in some instances were as high as 34.8 times cash flow.
But under questioning from Ben Preziosi, one of John Rigas’ attorneys, Coyle admitted that the leverage ratios for the loan agreements involved all of the borrowers, including some entities owned by Adelphia. The combined leverage ratios of all of the borrowers were in line with the loan covenants.
Coyle -- who was in his fifth day on the stand -- appeared to get a little flustered when Tim Rigas’ attorney, Paul Grand, pressed him on the leverage ratios of one Rigas co-borrowing entity that borrowed $400 million to purchase 55,000 cable subscribers in Georgia from Prestige Cable TV Inc.
When shown financial documents that the Georgia system’s cash flow was about $17 million -- 23 times the amount of the loan -- and asked why the board would approve such a deal that was clearly in violation of the loan agreements, Coyle said he "wasn’t clever enough to do the arithmetic and catch this."
Coyle became agitated when Grand questioned that despite his experience -- Coyle has been general counsel of Florida energy utility company FPL Group Inc. and a corporate lawyer for 40 years -- it was still not enough to be able to read, interpret and act upon a loan term sheet.
"It is not my job as a director to check the underlying calculations [of a loan deal]," Coyle testified. "I rely on the interpretations of management. I am not a sleuth."