Adelphia Seeking More Time From Its Lenders

Cable TV operator Adelphia Communications Corp. asked banks for more time and the ability to approach other lenders to line up credit it needs to make debt payments and avoid bankruptcy, people familiar with the matter said.

Adelphia met Tuesday with the arrangers of $8.1 billion of bank lines, including Bank of America Corp., Salomon Smith Barney Holdings Inc. and First Union Securities Inc., the people said. Adelphia, whose accounting is being investigated by the Securities and Exchange Commission and federal prosecutors in two states, also plans to discuss getting other financing, they said.

“The banks may give them some kind of relief but not without demands,” said investor Jerry Paul, who holds some of Adelphia’s bonds in the assets he helps manage at Quixote Capital Management. A Chapter 11 bankruptcy filing is more likely, Paul said.

Adelphia’s bank debt was considered in default when the company missed deadlines on filing 2001 financial statements. A waiver from the banks would keep the company from having to repay early the $7 billion it has borrowed on the credit lines and may allow it to tap the remaining $1.1 billion.

Adelphia already missed $45million in payments on other obligations, and the company’s shares face delisting by Nasdaq.

Officials at Coudersport, Pa.-based Adelphia didn’t return numerous calls for comment.

Adelphia shares were halted for the fifth day on Nasdaq.

Niraj Gupta, an analyst at Citigroup Inc.’s Salomon Smith Barney, Adelphia’s lead advisor, Tuesday lowered the rating on the company’s shares to “sell.”

The rating reduction reflects the growing risk of a bankruptcy filing, Gupta wrote, and the “low likelihood” that the sixth-biggest U.S. cable operator will persuade banks to waive the default on its credit lines.

Adelphia is talking with founder John Rigas and his family about them moving almost $2 billion in assets to the company’s balance sheet, offsetting some of the $2.3 billion borrowed by them, according to published reports.

The fourth-biggest issuer of junk bonds last week missed a $23.4-million interest payment on 9.375% notes due in 2009 and a $6.47-million dividend payment on 7.5% Series E convertible preferred stock; it has 30 days to avoid a default.

“You need a bondholder committee to make people realize that someone is looking over their shoulder and watching every move they make,” said Tom Dinsmore, who manages about $190 million of convertible bonds at Davis-Dinsmore Management Co. and sold his Adelphia holding this year.

Adelphia suspended an audit by Deloitte & Touche and is conducting an investigation into issues raised during the preparation of its annual report. The company has said it may restate three years of financial results to reflect some of the loans it guaranteed to partnerships controlled by the Rigas family.

The Rigas family owns about 20% of Adelphia’s stock and controls 60% of its votes.

John Rigas, who quit as chairman and chief executive last week, remains on the board, as do four other family members.

Adelphia, which owns cable systems with more than 5.8 million subscribers, said this month that it would look for buyers for systems in Southern California, Florida, Virginia and the Southeast to reduce debt.