Adelphia Misses Interest Payment; Rigas’ Son Quits

The myriad woes of Adelphia Communications Corp., the largest cable TV operator in Los Angeles, continued to mount Thursday as its chief financial officer resigned, the company missed an interest payment, and it disclosed more details of a sweeping internal probe into its financial dealings.

Timothy J. Rigas’ resignation as CFO came a day after his father, John J. Rigas, quit under pressure as chief executive and chairman amid a plunging stock price, deteriorating financial condition and federal investigation into accounting and loan practices. John Rigas founded Adelphia in 1952.

John and Timothy Rigas, however, will retain seats on the board of Adelphia, which their family still controls. The Rigas family owns 20% of Adelphia’s shares but has 60% voting control.

Adelphia missed a $23.4-million interest payment Wednesday. The Coudersport, Pa.-based company has 30 days before being in default.

Adelphia’s troubles started in late March, when it disclosed that it guaranteed $2.3 billion in loans to partnerships controlled by the Rigas family that wasn’t accounted for on its books. Some of the money was used by the family to buy additional Adelphia stock.

Since then, Adelphia’s stock has plunged more than 80%. The company is struggling to avoid being delisted by Nasdaq and formally told the Securities and Exchange Commission on Wednesday that it won’t file yet another financial report on time pending a review of its finances.

Adelphia also detailed plans for a special committee made up of independent directors to investigate transactions involving the Rigas family and Adelphia, which reportedly include investments in land and golf courses.

In the statement, interim Adelphia Chief Executive Erland E. Kailbourne, former chairman of Fleet National Bank’s New York region, pledged that the special committee made up of himself, Caithness Corp. Chairman Leslie Gelber and FPL Group Inc. General Counsel Dennis P. Coyle is “committed to addressing all issues head-on and resolving them quickly and thoroughly.”

Kailbourne said the committee will “hire a team of lawyers, forensic accountants and financial advisors” to pore over the company’s books and records, as well as interview employees.

Adelphia has been under fire by dissident shareholders led by cable mogul Leonard Tow, head of Citizens Communications Co., who is trying to place three directors on Adelphia’s board.

Adelphia has 1.2 million subscribers in Southern California and has planned to put the operation up for sale as part of an effort to raise money to reduce debt.

Adelphia’s stock did not trade Thursday, pending the decision by Nasdaq.

An Adelphia spokeswoman declined to comment beyond the statement issued by the company.