Adelphia May Have Violated Covenants

Adelphia Communications Corp., a cable-television company that disclosed it had kept $2.3 billion in debt off its books, may be liable for $500 million in bank loans to a former telephone unit. Adelphia could be in violation of debt covenants if the $2.3billion is included on the balance sheet, said Sean Egan, managing director of Egan-Jones Ratings Co.

Egan-Jones put Adelphia’s credit on negative watch.

Shares of Adelphia have plunged 27% in two days, erasing about $1 billion in market value. The company disclosed the loan information for the unit, Adelphia Business Solutions Inc., in a filing with the Securities and Exchange Commission. Adelphia officials declined to comment.

Adelphia shares fell $1.80, or 11%, to $14.90, on Nasdaq.