Mellon Bank auctioned off roughly $100 million of Adelphia Communications subsidiary bank debt last Thursday, as the workout process drags on. The Pittsburgh-based bank sold roughly $15 million of the cable company's Frontier Vision facility in the 86 range, $60 million of its Century-TCI facility around 85, and $25 million of the Century Cable revolver in the 68-69 context. It could not be determined whether the sales covered all of Mellon's Adelphia exposure. Mellon Bank officials declined to comment and a spokesperson did not return calls by press time. Christopher Dunstan, Adelphia treasurer and cfo, could not be reached by press time and a spokesperson did not return calls.
Goldman Sachs is believed to have been involved in the trades of the Frontier Vision and TCI credits, but the other participant could not be determined. Goldman officials declined to comment.
The precise reason why Mellon decided to sell at this time could not be determined, but one trader explained, "The cost of working it out is greater than the cost of selling it." A recent research report issued by Goldman Sachs predicted that banks who had not yet marked Adelphia's bank loans as non-performing would do so after the results of the Shared National Credit exam were released. The exam is conducted annually by the Federal Deposit Insurance Corporation, the Federal Reserve Bank, and the Office of the Comptroller of the Currency to ensure consistency among the federal banking regulators in the classification of large syndicated credits. The credits are reviewed and a quality rating is assigned and reported to all participating banks. According to one source, the ratings have already been issued and there is an appeal process with results likely to come sometime around the end of this month. One dealer said that Adelphia was given a poorer rating than expected.
Generally, cable paper has been given a more favorable reception by the secondary loan market of late. Levels for cable names such as Adelphia and Charter Communications have received a boost following the news that RCN had sold its New Jersey-area cable systems for $245 million, which worked out to roughly $3,000 per subscriber, according to a market source (LMW, 9/2).