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Approval Expected for Adelphia Breakup Fee

Apr 20, 2005  •  Post A Comment

Cablevision Systems Corp.’s uphill battle to snag Adelphia Communications could get a bit steeper if a federal bankruptcy court judge approves a plan to pay Time Warner and Comcast a breakup fee of $440 million if their joint bid for Adelphia doesn’t lead to a sale.

The judge’s ruling, expected Wednesday, is expected to support the breakup fee. That would make it more difficult for Cablevision to win the Adelphia auction because Cablevision would have to compensate credit holders for the $440 million that Adelphia would have to pay Time Warner and Comcast.

Weeks after the offer deadline passed, Cablevision swooped in with a $16.5 billion all-cash offer, hoping its bid would best a $17.6 billion cash-and-stock offer from Time Warner and Comcast. Then Cablevision sweetened its offer to $17.1 billion. Most analysts continue to believe Cablevision is a long shot to win the race for Adelphia.

Word of the fee came in Adelphia’s filing submitted late Tuesday to the Securities and Exchange Commission. The filing included a copy of a motion filed in court April 8 that discussed elements of the auction progress, including the breakup fee. In the motion, Adelphia describes the TW-Comcast bid as the “most likely to maximize value,” though that assessment came before Cablevision submitted its initial offer.