Adelphia outlines cluster auction

Adelphia on Tuesday said potential buyers could bid on any or all of the seven clusters, which have been structured to operate as stand-alone companies.

Adelphia's investment bankers at UBS and Allen & Co are hoping to wrap up the sale by the end of the year.

The decision to divide Adelphia into clusters came after it became clear that the company was unlikely to be sold in one piece.

Among the probable participants in the auction are Time Warner and Comcast, the two media giants, as well as a number of cable entrepreneurs who have teamed up with private equity groups to prepare bids.

Bill Schleyer, chairman and chief executive of Adelphia, on Tuesday offered an upbeat assessment of the auction process, saying the company was ?pleased with the level of preliminary interest?.

The clusters of assets suggested by Adelphia are: Northern New England/Eastern New York; Cleveland/Greater Ohio Valley; Florida/Southeast; California/Western; Virginia/Maryland/Colorado Springs/Kentucky; Pennsylvania; and Western New York & Connecticut.

The outcome of the auction is only likely to be approved by the bankruptcy court if it yields a greater valuation of Adelphia than an internal reorganisation plan that fixed the company's price at about $18bn.

However that number might not be the ultimate reference as valuations of publicly traded cable companies have suffered recently.

Adelphia, which is restructuring under bankruptcy protection and could choose to emerge as an independent concern, expects final bids for the assets by the year's end.

Subscribers in certain regions, including Southern California and Florida, are expected to generate more bidding interest than those in other areas.

Sanford C. Bernstein analyst Craig Moffett said Adelphia's California assets, grouped with those in the Western states, will be the auction's ?main prize,? while the Florida and Southeastern US cluster could generate interest from several bidders but fits best with Comcast's operations.

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