$8.8 Billion in Financing for Adelphia

If approved, the exit financing would be more than four times the record $2 billion received by Kmart last year.
Stephen TaubFebruary 26, 2004

Adelphia Communications Corp., whose founders and former top executives are currently on trial for fraud and other charges, announced that it arranged $8.8 billion in exit financing as part of a reorganization plan that would take it out of bankruptcy.

If the plan is approved by the bankruptcy court, it would be by far the largest exit financing a company has ever received.

Last year Kmart Holding Corp. received a record $2 billion in financing when it emerged from bankruptcy, and UAL is currently trying to obtain approval for $2 billion in exit financing as part of its reorganization plan.

JPMorgan Chase & Co., Credit Suisse First Boston, Citigroup Inc., and Deutsche Bank AG will lead the financing package; each will provide an equal share of the commitment. The package includes $5.5 billion of senior secured credit facilities, a $3.3 billion bridge facility, and a $750 million revolving credit facility following the company’s emergence from bankruptcy.

The proposed plan values Adelphia at $17 billion.

The company announced that it intends to issue preferred securities and common stock after it emerges from bankruptcy. Under the plan, Adelphia will distribute cash, preferred shares, and common stock as well as interests in a litigation trust for its creditors, shareholders, and litigants. However, no one from the Rigas family, the company’s founders, will receive payments for their equity stakes or other claims.

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