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Adelphia to Delay Annual Report

Accounting: Cable provider's shares drop 12% on concerns about loans to family-owned partnerships.

April 02, 2002|From Bloomberg News

Adelphia Communications Corp.'s annual report will be delayed while the sixth-largest U.S. cable television provider reviews accounting related to $2.3 billion in debt disclosed last week.

Adelphia shares fell 12% Monday on concern the company has yet to provide details on private partnerships that hold the debt or specify what assets back up the borrowings.

"They need to come out with more disclosure as quickly as possible," said Jonathan Hatcher, an analyst at Strong Capital Management Inc., owner of Adelphia stock and bonds. "Anything that happens without more disclosure is a negative."

Adelphia, controlled by the Rigas family, has lost more than $1.3 billion in market value since Wednesday, when the company revealed it was the guarantor of loans to family-owned partnerships including Highland Holdings. Highland, which analysts say owns cable assets and Adelphia shares, used some of the borrowed money to buy more stock.

Chairman and Chief Executive John Rigas said in a statement that Adelphia recognizes the "desire for greater clarity and transparency" and is "committed to providing it in a timely manner."

Adelphia asked the Securities and Exchange Commission for a 10-K filing extension, saying it's conducting an accounting review with outside auditor Deloitte & Touche. Highland Holdings acquired $567.4 million in convertible shares from Adelphia, the company revealed in an SEC filing in February.

Adelphia shares fell $1.78 to $13.12 on Nasdaq. The stock has declined 36% since Wednesday to its lowest price in more than four years.

The Rigas family's use of company-backed debt to finance the purchase of Adelphia shares may represent a conflict of interest, Morgan Stanley analyst Richard Bilotti wrote in a research report.

Excluding the $2.3 billion in borrowings held by partnerships, Adelphia had debt of $14.7 billion at the end of 2001. The company has disclosed it also may be liable for $500 million in bank loans to a former telephone unit that filed for bankruptcy last week.

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