Bankrupt cable company Adelphia Communications Corp. said Thursday it won court approval for an $8.8 billion financing package it will use to finance its exit from bankruptcy.
Adelphia, whose former management is awaiting a jury verdict on federal fraud charges, also said it is "vigorously pursuing" the sale of the company while also preparing for emergence from Chapter 11 bankruptcy as a stand-alone company.
The loan approval came despite complaints by creditors and shareholders that the company should not pursue a loan as a precursor to bringing the company out of bankruptcy as an independent company.
Instead, the dissident groups maintained that the company should exclusively pursue a sale which they said would realize more value for creditors.
"We need to get on with it," said Leonard Tow, co-head of the Adelphia court-appointed equity committee, in an interview. "To arrange at extraordinary cost this exit financing is to our mind a waste of money for the estate beneficiaries."
Tow, who controls about 12 percent of Adelphia's stock, was among those who pressured Adelphia to pursue a sale option, which it did in April.
Tow, who is also chairman and chief executive of Citizens Communications Corp. , estimated that Adelphia could garner $22 billion in a sale, while Adelphia's advisors previously valued the company at $17 billion. Adelphia also said its planned restructuring plan would yield nothing for shareholders except the proceeds of future litigation.
The $8.8 billion exit financing package from J.P. Morgan Chase & Co., Credit Suisse First Boston, Citigroup Inc. and Deutsche Bank AG, will be used to finance the cash payments to be made under the company's proposed reorganization plan.
It includes a $750 million revolving credit facility to be used by the company following its emergence from bankruptcy.
The approval, said Adelphia, "underscores the health and improvement of Adelphia's underlying business."
