Cablevision Boosts Offer for Adelphia

Cablevision Systems Corp. on Tuesday raised its offer to buy Adelphia Communications Corp.’s cable television assets to $17.1 billion from $16.5 billion to scuttle a purchase by Comcast Corp. and Time Warner Inc., people familiar with the matter said.

In a related development, Adelphia on Tuesday said it had agreed to pay Time Warner and Comcast a breakup fee equal to 2.5% of the purchase price should it sell to another bidder.

Time Warner and Comcast have offered to buy Adelphia for $17.6 billion to $18 billion, people familiar with the matter said. A U.S. Bankruptcy Court judge has yet to approve the deal. Those purchase prices would yield a breakup fee of $440 million to $450 million, and both the breakup fee and sale would require court approval.

The breakup fee would come from the proceeds of the sale, Adelphia said Tuesday in court papers filed in New York.

Adelphia, which filed the ninth-biggest bankruptcy case in U.S. history in June 2002, is the largest cable provider in Southern California. However, it has the worst service among the five operators in Los Angeles, city regulators said.

Greenwood Village, Colo.-based Adelphia has been marketing its assets for more than a year in a bid to repay creditors owed more than $18 billion.

The company said it was finalizing the terms of the asset purchase agreement with Time Warner and Comcast. The cable operator, the nation’s fifth-largest, said the joint offer “is the bid most likely to maximize the value of proceeds to stakeholders.”

Time Warner and Comcast would also be eligible to receive the fee if Adelphia doesn’t file court papers seeking approval of a plan to exit bankruptcy protection by Oct. 15, court papers show.

Adelphia spokeswoman Erica Stull and Cablevision spokesman Jim Maiella declined to comment. Comcast spokesman Timothy Fitzpatrick and Time Warner spokeswoman Mia Carbonell also declined to comment.

As part of the asset purchase agreement, Adelphia agreed to cease soliciting offers from other prospective buyers, the cable operator said in court papers. The “no-shop” agreement doesn’t preclude Adelphia from responding to offers.

Adelphia Founder John Rigas, 80, and son Timothy Rigas, 48, were convicted of conspiracy and fraud in New York federal court last year for looting Adelphia and lying about its finances before the bankruptcy filing. They will be sentenced in June.