Court Clears Adelphia Financing Plan

A federal bankruptcy court approved Adelphia's $8.8 billion exit financing plan.

The company said the U.S. Bankruptcy Court for the Southern District of New York also definitely approved related documents associated with the commitment, and the payment of related fees and expenses.

The final approval followed two days of court hearings last week and conditional approval on June 22 of the commitment, as amended, Adelphia said. Final approval came after Adelphia, the lenders and certain creditors agreed on modifications.

The company said in February that JPMorgan Chase, Credit Suisse First Boston, Citigroup and Deutsche Bank were leading the financing package, with each providing an equal share of the commitment. The financing package includes $5.5 billion of senior secured credit lines and a $3.3 billion bridge loan.

Adelphia said it "remains on a dual track process of vigorously pursuing a sale of the company and, on a parallel path, preparing for emergence from Chapter 11 as an independent entity." The company said approval of the exit facility commitment positions it to emerge as an independent entity if that course produces the greatest possible value for the bankruptcy estate.

The approval comes just a month after an executive at a rival cable operator, and a potential buyer of Adelphia assets, took a slap at the Adelphia auction. "The process is just a mess. It's horrible," Cox Communications ( COX) CEO Jim Robbins said June 4. "The process is so disgusting that we don't want to get anywhere near it."

Adelphia, which has been operating under bankruptcy protection since 2002, had been planning to emerge from Chapter 11 as a freestanding cable operator, the fifth largest in the nation.

But bowing to pressure from equity holders and debtors who argued they'd be better compensated if Adelphia were auctioned off directly out of bankruptcy, Adelphia announced April 22 that it would explore a possible sale of the company. Investors have been watching the proceedings because big players like Cox, Comcast ( CMCSA) and Time Warner ( TWX) have been considered the most likely candidates to buy parts of Adelphia.

Adelphia's shares, which are quoted on the pink sheets, have risen and fallen on hopes that a reorganization would include residual value for pre-bankruptcy shareholders. Adelphia's stock, which spiked at $1.72 earlier this year, rose 4 cents Thursday to 54 cents.

Adelphia founder John Rigas, along with two of his sons and another executive, are on trial in federal court in Manhattan, facing charges of fraud and conspiracy. Their jury has been deliberating for four days.

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