Bidders Get Data on Adelphia

Adelphia Communications Corp.’s auction entered the second stage last week, with every party that had expressed an initial interest in the Denver-based MSO advancing, sources familiar with the situation said, although not every party has submitted a preliminary bid.

More than 50 interested parties signed confidentiality agreements with Adelphia, which gave potential bidders access to preliminary financial information.

During the second stage, bidders receive access to an electronic data room with more detailed financials.

Adelphia, which filed for Chapter 11 bankruptcy protection in June 2002, placed itself on the block back in August. The auction actually got underway after the MSO’s financial advisers — Allen & Co. and UBS Investment Bank — obtained bankruptcy court approval in September.

At the time, Adelphia said non-binding preliminary bids were required to advance to the second stage and gain access to more detailed financial information.

According to sources familiar with the auction, one potential bidder that has not submitted a preliminary bid is Time Warner Inc. Time Warner is contemplating making a joint offer for the Adelphia systems with Comcast Corp. — something Adelphia allowed last month. Sources said the top two MSOs haven’t begun “due diligence” examination of Adelphia systems yet.

Adelphia has split its 5.2 million subscribers into seven separate clusters. Bidders can make offers for all or parts of the company. Bidding is expected to generate between $17 billion and $20 billion.

Adelphia had expected to receive preliminary bids on the systems by the end of October, with final bids due by the end of December and a final decision due in early 2005. Most observers have expected the auction to drag on past the deadline. Adelphia declined to comment.