Approximately $15 million of Adelphia Communications' Century Cable bank debt traded in small pieces in the 91-92 range last week as investors fretted over a possible delisting of the company's stock from the Nasdaq exchange. It sunk further into the mid to high 80s by midday last Thursday as investors fear that the company may have skewed its subscriber numbers.
If the company's stock is delisted, Adelphia may have to deal with $1.4 billion in convertibles puttable to the company, traders said. Market players question whether the company has the liquidity to handle such an action. Dealers believe the company no longer has access to its Century Cable revolver due to covenant violations and it missed a $23 million bond interest payment. The delisting hearing was scheduled for last Thursday but no decision was made by press time.
As one of the most liquid of Adelphia's credit facilities, Century Cable's levels have fluctuated drastically since the company disclosed more than $2 billion of off-balance sheet debt during the last week of March. Levels for the Century Cable bank debt were in the 99 range, sunk as low as 90-92 after the company failed to file its 10K, and rose last week to the 94-96 range after the company reported that it would sell some of its cable assets.
Many dealers see value in the company's bank debt long-term, noting that the debt is held by the individual operating companies and not by the holding company. Even when fully drawn, the loans would still be over collateralized by the operating companies, one trader explained. If it turns out that the company inflated subscriber numbers, all bets are off, said a dealer. Calls to Karen Chrosniak, Adelphia spokeswoman, were not returned by press time.