Adelphia Puts Itself on the Block

Adelphia Communications said Thursday itwill explore a possible sale of the company.

The announcement represents a major policyturnaround for the nation's fifth-largest cable TVoperator, which has been operating under bankruptcyprotection since 2002.

It represents a victory for Adelphia shareholdersand other creditors of the company, who had argued against the plan ofAdelphia's current management to exit Chapter11 protection by the end of this year as afreestanding company.

The equityholders say that a sold-off Adelphiawill reap more value for creditors and shareholdersthan an independent company. It's their belief that asale of Adelphia will raise enough money to not onlypay off creditors but also return value toshareholders. That's contrary to the usual case inbankruptcy reorganizations, in which pre-bankruptcyshareholders find their stock to be valueless.

Thursday's news also increases the possibility ofmajor changes in the landscape of the cable TVbusiness. Three of the nation's largest cableoperators -- Comcast ( CMCSA), Cox ( COX) and Time Warner ( TWX) -- are all believed to have both theinterest and the means to acquire all or part ofAdelphia.

Adelphia's shares, which have traded onspeculation that the company could be auctioned offout of bankruptcy, were quoted at 70 cents on the pinksheets Wednesday. Shares in the stock have rangedbetween 4 cents and nearly $2 over the past year.

Adelphia said its board decided Wednesday toexplore a possible sale, citing increasing demandsfrom interested parties.

"We were pursuing a plan of reorganization thatcalled for an independent Adelphia because we believedit was in the best interests of our bankruptcyconstituents," CEO Bill Schleyer said in a statement."Increasingly, in our continuing dialogue withconstituents after filing the plan, it became clearthat a broad range of constituents preferred to allowthe market to determine the appropriate value forAdelphia."

"Over the last week," the company said in itsstatement, "the sentiment in favor of market testingthe company's value crystallized to the point where itbecame appropriate to explore a possible sale of thecompany."

At a bankruptcy hearing slated for next Monday,Adelphia management had been expected to fight to keepits plan of emerging as an independent entity -- the onlybankruptcy reorganization plan under consideration.

The company's announcement "represents a turning point in the case," Peter Morgenstern, attorney for Adelphia's equity committee, said in a statement. "The Equity Committee believes that a sale of Adelphia's operatingassets offers the best opportunity to maximize recoveries for all of Adelphia's constituencies, and particularly for shareholders. This announcement and change in approach by the Company is an important first step in that direction."

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