Adelphia Communications Corp. today announced what it believes will be the largest exit financing ever completed at $8.8 billion. Deutsche Bank, J.P. Morgan, Credit Suisse First Boston and Citibank are the equal leads for the financing. The commitment breaks down into a $5.5 billion bank facility and $3.3 billion bridge, noted Vanessa Wittman, CFO, on a conference call. She declined to disclose the interest rates, except to say it will be very competitively priced.
The bank facility includes a $750 million revolver that is not expected to be drawn upon emergence from bankruptcy. Though it had been envisioned Adelphia would emerge in the middle of 2004, it is now anticipated it will be pushed beyond that date.
According to Wittman, Adelphia would expect that the approximately $8 billion available without the revolver would repay the allowed claims of pre-petition banks as well as the DIP and emergence costs and have dollars for future growth. However, she would not answer if Adelphia would be cash-flow positive on emergence, and whether the revolver would be used for cash-burn.
Wittman also responded to a concern that the litigation against the pre-petition banks was being forced to be settled to allow some of them to provide the exit. She noted that there is a situation with litigation outstanding as it relates to the co-borrowing facilities and there were a tremendous number of banks sued by the unsecured creditors committee and the company acting as nominal plaintiff.
But she stated, "One of the primary reasons for seeking a new money deal around the exit was in order to preserve that litigation and not force settlement. So no, the terms of the exit facility do not contemplate nor force the settlement of that litigation. That being said, of the four leads on this facility, none of the four are agent banks for the co-borrowing arrangements."
J.P. Morgan and Citigroup are the co-lead arrangers with respect to $1.5 billion in debtor-in-possession financing. Deutsche Bank had its nose out in providing the financing with one of the reasons being that it was not in the agent group (LMW, 2/2).