Adelphia Names New Accountant
DAVID B. CARUSO
Jun. 14, 2002
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PHILADELPHIA (AP) _ Adelphia Communications, which fired its accounting firm earlier this week amid controversy over off-the books debt, said Friday that it had hired PricewaterhouseCoopers as its new independent accountant.
Meanwhile, the nation's sixth-biggest cable television system owner is asking two banks to arrange a loan of about $1.5 billion that would allow it to continue operating if it files for bankruptcy protection, sources familiar with the matter said Friday.
The financing being arranged by Citigroup Inc.'s Salomon Smith Barney division and J.P. Morgan Chase & Co. could be in place within two weeks, said the sources, who spoke on condition of anonymity. The loan would be spread among a large number of banks.
Dan Noonan, a spokesman for Salomon, and Adam Castellani, a spokesman for J.P. Morgan, declined comment.
The news comes as Adelphia has been exploring selling assets in order to pay debts. A grace period on $44.7 million worth of debt payments missed in mid-May expires Saturday.
In announcing the selection of a new accounting firm, Adelphia chairman and interim chief executive Erland E. Kailbourne said Friday that PricewaterhouseCoopers ``will provide Adelphia with a fresh and independent perspective on the company's financial situation.''
Adelphia suspended work by its previous independent accountant, Deloitte & Touche, on May 14 as it tried to sort out off-the-books debt estimated at more than $3 billion. Adelphia fired the firm Sunday after learning that past audits had failed to detect the questionable business arrangements between the company and the family of its founder, John J. Rigas.
PricewaterhouseCoopers' immediate task will be to help prepare the company's annual financial report for 2001, which is now many weeks late, Adelphia said.
Adelphia was delisted from the Nasdaq stock exchange for failing to file the report on time. Company shares closed at 15 cents Friday in over-the-counter trading.
The company's financial dealings with the Rigas family are the subject of a Securities and Exchange Commission probe.
In an SEC filing Friday, Adelphia said it had retained the firm Conway Delgenio for restructuring advice and reassigned members of its finance staff to ensure that future audit information would be provided ``by officers who had no involvement in prior management's improper activities.''
Deloitte had said in letters to the company that it was concerned that Adelphia employees had falsified accounting records.
Adelphia said it transferred several staff members who had reported to a former vice president accused of receiving an unauthorized loan, fired seven employees ``whose primary function was to provide services to members of the Rigas family'' and dismissed 11 employees who worked at a partially constructed company golf course near its headquarters in Coudersport.
Adelphia said it was also investigating why the company bought a $700,000 membership at the exclusive Briar's Creek Golf Club in South Carolina in 2000, and whether the membership was related to company business or was for personal use by the Rigas family.
A federal judge on Thursday prohibited Adelphia Business Solutions _ a bankrupt spinoff of Adelphia Communications _ from making severance payments to members of the Rigas family, saying the settlement was unfair to the company's creditors.
Under the deal, the company had agreed to pay the family's legal costs, buy them liability insurance and give Rigas's son James $350,000 in severance pay. In return, family members gave up executive positions with the company and resigned from its board.
A similar severance agreement, reached last month, called for John Rigas to get $4.2 million over three years in exchange for giving up control of Adelphia Communications. Rigas family members are also to be provided with offices and a staff, medical benefits and use of the company's private jets.
AP Business Writer Alan Clendenning contributed to this report from New York.
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