Adelphia Bonds Fall on Reorganization Plan

Bonds of cable company Adelphia Communications Corp. fell sharply Wednesday after the company filed a new bankruptcy reorganization plan that lowered the estimated amount bondholders would recover.

Adelphia’s senior bondholders are expected to recover about 31% to 85% of their claims, down from previous estimates of 56% to 105%, according to the plan.

“The equity value of the estate has been reduced,” said Harold Rivkin, president of distressed debt firm H. Rivkin & Co. “That seems to be driving down the price of the bonds.”

Adelphia’s 10.25% bonds due in 2011 plunged to 53.5 cents on the dollar, down from 63.2 cents Tuesday, according to MarketAxess.

The smaller recoveries stem from a lower estimate of the equity value of a new company being created when Time Warner Inc. and Comcast Corp. acquire Adelphia’s assets. Adelphia bondholders will receive stock in the new cable company being formed from that combination.

Time Warner and Comcast last year agreed to buy Adelphia for about $17.6 billion in cash and stock.