Adelphia Communications – the US cable operator that allegedly became a personal piggybank for the controlling Rigas family – has gained bankruptcy court approval for up to $1.5 billion (€1.55bn; £0.99bn) in new loans as it tries to restructure its way out of Chapter 11.
The sum, to be funded by J P Morgan Chase and Citigroup, is the second highest debtor-in-possession loan ever, behind Kmart’s $2bn earlier in 2002.
It is also a particularly complex loan, the cash being distributed between Adelphia’s 200-plus operating divisions, each of which falls under one of the company’s seven major subsidiaries, or ‘silos’.
Meanwhile, the wrangling over Adelphia’s murky financial history continues. Part of the debtor-in-possession agreement includes the payment by the group of $300m in interest accrued on a $4.6bn loan.
This payment is controversial since only $1.5bn of the loan was ever seen by Adelphia, the other $3.1bn allegedly being pocketed by the Rigas clan. The cable firm’s creditors believe that the banks providing the loan are partly responsible for letting such enormous fraud go unnoticed, and hence are reluctant to pay the interest.
Data sourced from: Washington Post Online; additional content by WARC staff