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Adelphia Creditors Prefer Cash Offer from Time Warner-Comcast

Feb 25, 2005  •  Post A Comment

Adelphia Communications’ creditors have told Time Warner and Comcast Corp. that they would agree to the terms of the two companies’ $17.6 billion joint offer if it were entirely cash, instead of the cash-and-stock bid of the same amount currently on the table, people familiar with the situation said.

News of the creditors’ wishes, first reported Friday in The Wall Street Journal, provides the latest indication that the sale of the bankrupt cable operator is proceeding and that negotiations between Adelphia’s creditors are under way.

The article said the chances of Time Warner and Comcast presenting a cash offer to Adelphia are slim–something the sources confirmed Friday. Comcast Chairman and CEO Brian Roberts has said repeatedly that Adelphia’s cable systems are not a must-have for his company and that he wouldn’t overpay to emerge the winner in any bidding war.

A Comcast spokesman declined to comment Friday on the report, as did a Time Warner spokesman.

Word of the progress provides more evidence that the Time Warner/Comcast bid leads the pack of interested parties. An investor group led by Providence Equity Partners and Kohlberg Kravis Roberts & Co. also has made an offer for Adelphia, but sources say that bid is lower than that of Time Warner-Comcast.

As expected by analysts, the Time Warner-Comcast offer involves combining Time Warner’s cable operation with Adelphia to form a new company that the bidding companies assert would be valued at $35 billion. Time Warner and Comcast’s offer would include $12 billion in cash and $5.6 billion, in stock in the new company.

Adelphia’s creditors reportedly would prefer an all-cash bid because they are not convinced a newly formed company would be worth the value Time Warner and Comcast are assigning it.