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Related quotes
| ABIZ |
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| BK |
36.49 |
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| FON |
17.15 |
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| WCGR |
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| 5/24/02 4:01:00 PM ET |
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Related stories
CEO For Life?
UPDATE 6-Ciena posts loss, warns revenues may fall
UPDATE 4-Ciena posts loss, 3rd-qtr sales seen flat to down
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UPDATE 3-Adelphia Business files for Chapter 11 bankruptcy
Reuters, 03.27.02, 1:15 PM ET
(Changes lead; adds parent results, forecasts; changes
byline from COUDERSPORT, PA )
By Sinead Carew
NEW YORK, March 27 (Reuters) - Telecommunications operator
Adelphia Business Solutions Inc.
(nasdaq: ABIZ - news - people) filed for bankruptcy
on Wednesday as its parent, cable television company Adelphia
Communications Corp.
(nasdaq: ABIZ - news - people), blamed the service provider for
its own wider fourth-quarter losses.
Adelphia, a former subsidiary of Adelphia Communications,
is the latest telecom operator to buckle under stiff
competition, mounting debt, and slim demand for voice and data
services in the telecommunications industry.
The struggling fiber-optic company said it and some
subsidiaries were seeking protection from creditors due to the
industry's decline and to the "virtual shutdown of the
telecommunications capital markets."
"It will be difficult for this company to come out from
bankruptcy, and if it does it will be in a different downsized
life form," said Vik Grover, an analyst for investment bank
Kaufman Brothers. "Its capital structure had too much debt and
this was its undoing."
Also on Wednesday, parent company Adelphia Communications
said its quarterly net loss quadrupled to $1.3 million, or
$6.95 per share, from a net loss of $255,818, or $1.73, a year
ago. The net loss for its telecommunications company widened to
$1.3 million from $124,429 a year ago.
In afternoon trading, the cable company's shares fell
$1.28, or 6.5 percent, to $19.11 on Nasdaq, where it was one of
the most active issues. Adelphia Business saw its stock fall 2
cents, or 23 percent, to 7 cents.
ANOTHER ONE BITES THE DUST
In its filing with the U.S. Bankruptcy Court for the
Southern District of New York, Adelphia Business listed debts
of $882.5 million and assets of $222.7 million.
It listed Bank of New York Co. Inc.'s
(nyse: BK - news - people) corporate
trust division as a trustee for about $750 million of the debt,
and Sprint Corp.
(nyse: BK - news - people) as the next largest creditor.
Adelphia Communications, which spun off the telecom arm in
January, and a Rigas family affiliate, have agreed to provide
debtor-in-possession financing of up to $135 million to the
bankrupt company so it can continue day-to-day operations while
it reorganizes.
The Rigas family includes Adelphia Communications Chairman
John J. Rigas and several of his children who are also
executives, board members, and major shareholders of the
company.
Start-up telecommunications companies have been hit
especially hard by slowing demand for services. That market is
now littered with bankrupt carriers such as Teligent Inc.,
360networks Inc., Viatel Inc., Winstar Communications Inc., and
PSINet Inc.
Among larger players, Global Crossing Ltd. <GBLXQ.PK> filed
for the fourth largest U.S bankruptcy in January, citing debt
of $12.4 billion, and McLeodUSA Inc.
(nasdaq: MCLDQ - news - people) followed soon
after.
Meanwhile, others in the industry, including Williams
Communications Group Inc. <WCGR.OB> and Metromedia Fiber
Network Inc.
(nasdaq: MFNX - news - people), have said they are weighing bankruptcy.
Adelphia Business Solutions said it is in negotiations on
the claims of holders of its 12.25 percent senior secured
notes, due in 2004. Any resolution will be subject to approval
of the bankruptcy court, it said.
Earlier this month, Standard & Poor's said it lowered its
corporate credit rating on Adelphia Business Solutions to "D",
its lowest possible rating, from "CCC-plus" after the company
missed a March 1 interest payment on the senior secured notes.
At the time, S&P said it also lowered its ratings on those
notes and on the company's other outstanding debt.
PARENT POSTS WIDER LOSS, SEES SUBSCRIBER GROWTH
The parent company, Adelphia Communications, reported
fourth-quarter revenue of $950 million compared $804.6 million
in the same quarter a year ago.
The company forecast an increase from 12 percent to 13
percent in its 2002 pro forma revenue and earnings before
interest, taxes, depreciation and amortization.
It also said it raised its 2002 digital and data subscriber
guidance to 2.7 million digital subscriptions and 775,000
high-speed data customers.
At the end of the first quarter, it expects to report
digital subscriptions of over 2.2 million.
Adelphia spun off the telecommunications arm, a 79
percent-owned subsidiary, through a common stock distribution
to the company's common shareholders on Jan. 11.
(Additional reporting by Siobhan Kennedy, New York
Technology desk)
Copyright 2002, Reuters News Service
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