ABS Files For Bankruptcy

Communications Today, March 28, 2002

The telecom shakeout claimed another victim Wednesday when communications provider Adelphia Business Solutions [ABIZ], a January spin-off from parent cable company Adelphia Communications [ADLAC], filed for Chapter 11 bankruptcy protection.

The company's bankruptcy filing was no surprise. Vultures began circling around ABS earlier this month when it wasn't able to meet a $15.3 million interest payment due March 1 on its senior secure notes and hired investment firm UBS Warburg to help it evaluate restructuring alternatives. The company suspended its preferred stock dividend this past January. ABS, which filed for protection on Wednesday with the U.S. Bankruptcy Court for the Southern District of New York, listed debts of $882.5 million and assets of $222.7 million.

Adelphia Communications and the Rigas family, which includes Adelphia chairman John J. Rigas, said in a statement on Wednesday that they will provide debtor-in-possession financing of up to $135 million to ABS so that it can continue day-to-day operations while it reorganizes. Adelphia Communications, which reported its fourth-quarter results on Wednesday, said ABS' net loss for the quarter increased to $1.3 million compared to $124,429 a year ago. Attempts by Communications Today on Wednesday to reach ABS officials were unsuccessful.

Erv Paw, a broadband consultant with InfoTech, a research unit of Communications Today publisher PBI Media, told Communications Today that mounting debt and a downturn in the economy did in ABS. "I think [ABS] is positioned properly, but they are having a hard time cash flow wise, just like everyone else in the telecom industry," Paw said. "[Adelphia Communications] put money into [ABS] to help them out [during bankruptcy], so that tells me that Adelphia is not giving up on [ABS]." >TK BT Group PLC [BTY]: