put some of its cable systems on the block Wednesday as the cable TV system operator continues to struggle with a massive debt overhang.
The company said after the close of trading that it would seek bids for its prize Los Angeles cable TV systems, which have 1.2 million basic cable subscribers, as well as systems in Florida, Virginia and the Southeast. Those systems serve a total of 1.55 million subscribers and account for about a quarter of the company's total subscriber base.
Selling all the systems being put on the auction block could cut the company's subscriber base in half, though Adelphia didn't say whether it hoped to go through with all the sales, or just unload the systems for which it got the best offers. Adelphia shares have lost more than two-thirds of their value in little more than a month and a half following the company's March 27 disclosure that it was potentially on the hook for $2.3 billion in related-party debt.
Since then the bad news has continued to flood in, with the company saying it was being investigated by the
Securities and Exchange Commission
, that it faced debt defaults as a result of failing to file its annual report on time, and that it faced a potential Nasdaq delisting action.
In the past, Adelphia's best-laid plans for cutting debt through asset sales have gone astray. Last year, the company talked about selling systems with 750,000 subscribers, but no deals came out of those intentions.
Although the asset sales could help Adelphia get out from underneath its debt, it's far from certain that equity investors will be in the clear. Since the cable operator is under pressure to sell, and since cable stock prices have been pushed down since the beginning of the year, the prices Adelphia could get for its systems are likely lower than what the company could have gotten, say, six months ago. Adelphia short-sellers and longs are also at odds over how much value would be left for equity holders once the company takes care of its debt.
Adelphia jumped 13% during Wednesday's techwide rally, adding 73 cents to $6.44.