External directors at beleaguered US cable TV network Adelphia Communications are poised to make a clean sweep of the Rigas family from the company’s board of directors.
Earlier this week the company’s three-in-one chairman, chief executive and president John J Rigas resigned from the board, followed twenty-four hours later by chief financial officer Timothy Rigas [WAMN: 20-May-02]. However, two junior Rigases remain in situ: executive vice president for strategic planning James Rigas and company secretary Michael Rigas.
Adelphia has been under siege since March, when it emerged that it had guaranteed $2.3 billion (€2.49bn; £1.58bn) in loans to the Rigas clan – a sum that has since soared to near $3bn, according to insiders.
A new management team was appointed last week, reportedly to the chagrin of the family who are expected to vote against the appointments. Although the dynasty owns only 20% of Adelphia’s shares, it controls 60% of the vote thanks to preferential voting rights.
The outside directors hope to persuade the family to relinquish two of its five board seats [thereby giving a majority to external directors], turn over to the company $1.2 billion of cable assets that it owns privately, absolve $575 million in convertible debt and surrender its preferential voting rights.
These concessions would strengthen the company’s balance sheet by about $1.7 billion - although they would not generate the liquidity Adelphia urgently needs for working capital and imminent interest payments. Such a deal might, however, persuade bankers to lend to the company again, internal sources say.
Data sourced from: New York Times; additional content by WARC staff