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Adelphia drama to continue with Rigas family on sidelines

May 27, 2002  •  Post A Comment

Now that Adelphia Communciations’ founding Rigas family has opted to step aside, lawyers, directors and creditors will begin sorting through the maze of inside deals and liabilities that could eventually lead to the breakup of the company.
The sixth-largest cable operator still is reeling from the Rigas family agreeing to relinquish control of the company by forfeiting its five board seats and super-voting shares, to forgive $567 million in debt owed to it by Adelphia, and to transfer more than $1 billion in assets to the Coudersport, Pa.-based concern.
But two grand juries (in Pennsylvania and New York), the Securities and Exchange Commission and lawyers representing disgruntled shareholders are probing $3 billion in debt rung up by former Chairman John Rigas and his sons, Michael, James and Timothy. Adelphia said last week it will be liable for $2.5 billion of that debt since the Rigases used the company to guarantee their loans. A number of shareholder and other lawsuits have been filed against the company.
The stock that represents the Rigas family’s 20 percent ownership and 60 percent voting control will be placed in a trust and overseen by a special committee of the company’s redrafted board to use as collateral until the debt is settled.
Although company officials have not commented on the internal dealings that led to the fiasco, sources and published reports say the Rigases tapped company funds either to directly pay for loans or to back loans to support personal investments ranging from a golf course and a hockey team to timber rights and even acquiring more Adelphia stock. The Wall Street Journal on Friday quoted sources close to the investigation who described it as a complex cash management system in which the Rigas family used company funds “almost like a personal bank.”
Adelphia and the Rigas family declined comment.