Cable Operators

Adelphia Nears Adviser Pick

6/22/2004 1:09 PM Eastern

Adelphia Communications Corp. is close to selecting advisers for the possible sale of its cable assets, with New York-based investment banker Quadrangle Group LLC and Swiss banking giant UBS AG leading the pack, according to sources in the financial community.

Adelphia, which filed for Chapter 11 protection in June 2002, is still pursuing a parallel path to emerge from bankruptcy as a whole company. But the hiring of Quadrangle and UBS, expected to be announced shortly, could sway the Denver-based MSO more towards a sale.
According to sources familiar with the matter, Adelphia could announce the Quadrangle and UBS deal “at any moment.” However, such a deal would have to be approved by the bankruptcy court and Adelphia’s creditors.
“There is a long process,” said one member of the financial community that asked not to be named. “It’s entirely possible that it may get announced and never happen. We’re dealing in a very mercurial world.”
Adelphia has been moving forward with its reorganization plan and had planned to emerge from bankruptcy intact by the end of the year. But in April, after objections from several creditor groups, Adelphia said that it would be open to an outright sale as well.
Several investment banks were in the running — including giants like Merrill Lynch & Co., Morgan Stanley and Lazard Frères & Co. LLC — but Adelphia was in the awkward position of having to select an adviser with no potential conflicts of interest in the sale. That left out virtually every major banker — many of whom have done business with Adelphia at one point — and led the company to look closer at smaller firms.
According to published reports earlier this month, boutique investment houses Allen & Co. and Jeffries & Co. were also being considered.
While Quadrangle has no history with Adelphia, it has a major presence in the cable industry. Quadrangle managing principal Steven Rattner started the media and entertainment practice at Lazard in 1989 and was in on several big cable deals before leaving to start Quadrangle in 2000. Quadrangle has advised Comcast Corp. on its purchase of AT&T Broadband and is an investor in Cablevision Systems Corp.
According to sources in the financial community, Quadrangle would serve as the lead banker in an Adelphia sale, dealing directly with potential bidders. UBS would handle most of the logistics of the process.
Adelphia, with 5.4 million subscribers, could attract between $17 billion and $20 billion in a sale. Several large MSOs are expected to make bids, including Comcast Corp., Time Warner Cable, and Cox Communications Inc.
Adelphia spokesman Paul Jacobson declined to comment.

September