Nasdaq delists Adelphia; Tow fights system sales

Things just continue to go downhill for Adelphia Communications, which, by Monday morning, could be just a shadow of the empire that once ruled Coudersport, Pa.

Nasdaq delisted the nation’s sixth biggest MSO after it failed to file financial reports and said it was a decision that could not be appealed. Adelphia’s stock had dropped to $1.16 at yesterday’s closing. It was at more than $20 per share in late March when the first of the alleged financial improprieties involving the founding Rigas family came to light.

Delisting adds to Adelphia’s money woes because holders of $1.4 billion worth of Adelphia convertible bonds would be able to turn them in and demand cash – which Adelphia presumably does not have.

Even if Adelphia manages to wade through the roiling financial waters, it could be only a shadow of itself when business reopens Monday. The company has said it will hold a board meeting tomorrow to consider a number of items--including the sale of cable systems that would halve the company’s size. Those systems include a lucrative batch of 1.2 million subscribers in the Southern California area, and that sale has drawn the ire of new board member--and 12.8% owner--Leonard Tow.

Not coincidentally, Tow, along with Century Communications, the former cable company he owned and operated, sold those systems to Adelphia. Late yesterday Tow, who it has also been reported would like a spot as chairman of the board, demanded the sale be halted until he has the opportunity to work some financial magic with Adelphia’s “lending community.”

Tow, in a letter to interim-CEO Erland Kailbourne, said he believed that Adelphia was planning to OK the sales tonight and present the deal to the board tomorrow.

“Such a sale would strip the company of its ability to conduct an orderly and profitable disposition of the remainder of the company’s assets when and if it is necessary,” he wrote, while seeking time to work out the troubled company’s financial puzzle.

“This would only be possible if no attempt is made at this crucial time to remove from the company its most valuable assets in an atmosphere of desperation,” he wrote.

Kailbourne wrote back that he was surprised by Tow’s objections and that, while something might happen Saturday, there would be no action before tomorrow’s board meeting.

“Your letter is also the first indication that you object to the company’s need to address its liquidity issues through asset sales – proposed asset sales that I thought you fully agreed were essential to the company’s survival,” Kailbourne wrote back.

He also demanded that Tow “provide me in as much detail as you are now able, what specific, concrete alternative or alternatives you propose.”

The Los Angeles area systems are considered the plum in the assets sales. Charter Communications, Cox Communications and Time Warner Cable are considered frontrunners for the properties--should they be sold tomorrow or later.