Adelphia Communications was on the tip of investors' tongues last week as market players try to anticipate what the next step will be for the once infallible company. The company's Century Cable facility traded frequently in small pieces in the high 80s to low 90s context. Dealers believe that Adelphia's holding company will file for bankruptcy, but are unsure what the individual operating companies will do.
The value of the company's bank debt still remains close to par, bankers assert, explaining that the debt is held at the operating company level. Value is found in the subscriber worth and investors estimate that a total of $5.5 - 5.8 million subscribers are held by the operating companies. If each of those subscribers is worth at lowest $1,200 and at highest $4,000 depending on the geographical region and quality of the network, according to dealer estimates, Adelphia's $8 billion in bank debt is sufficiently backed. If the company has inflated some subscriber numbers, as some speculate, then the true value of the company can still be easily obtained. "You can go out and physically count [the subscribers]," one trader said.
Investors see the Rigas family's willingness to give up its board seats as a positive indication of a new era for the company. The company is reportedly in discussions with financial and leveraged buyout firms to raise financing for liquidity relief. Dealers speculate that Apollo Advisors and the Blackstone Group, as well as cable companies Cox Communications and Time Warner Cable could be on that list. A spokesman at the Blackstone Group declined to comment. Calls to the companies were not returned by press time.