Adelphia Communications Corp. disclosed details of its co-borrowing
agreements and deals it cut with Rigas-family businesses in an
8-K Securities and Exchange Commission filing Friday night, and Adelphia
investors returning from the holiday weekend will be stunned when they see the
level of nepotism outlined by the company.
As of April 30, the MSO said the amount outstanding under its co-borrowing
credit facilities was $4.58 billion.
And it mapped out a complex system for moving cash from the company to
private businesses owned by Rigas-family members, including the National Hockey
League's Buffalo Sabres, Eleni Interiors (furniture store), Wending Creek
(maintenance company), Dobaire (design firm), the Coudersport Theatre and
ErgoArts and SongCatcher Films -- the latter two being film companies owned by
Adelphia founder John Rigas and his daughter, Ellen Rigas Venetis.
Among the transactions a special committee formed by the Adelphia board is
investigating is a purchase from Highland -- an off-balance-sheet partnership --
of 5.8 million shares of Adelphia class-B common stock and $166.4 million in
bonds.
The committee is investigating whether 'certain employees of the company may
have prepared documentation' in January 2002 'to support the accounting
treatment of this transaction as a cash transaction,' according to the 8-K.
Other highlights:
\u0007 Adelphia said it doesn't know whether Wending Creek, Eleni, ErgoArts and
SongCatcher did business with anyone other than Adelphia and the Rigas
family.
\u0007 In 2001, Adelphia paid Eleni $12.4 million and Dobaire $371,000 'primarily
for office furniture and fixtures and related installation and design
services.'
\u0007 It paid Wending Creek $2 million for maintenance, including snow removal
and landscaping.
\u0007 Adelphia gave $100,000 to Rigas-family members and entities for office and
warehouse rent payments.
\u0007 In 2001, it paid Ellen Rigas Venetis $50,000 for 'community-service and
public-relations consulting services.'
\u0007 The Rigas family obtained margin loans that were backed up by Adelphia
equity and debt. The family has made $241.2 million in payments tied to the
margin calls since January 2001, Adelphia said.
\u0007 The committee is investigating whether former vice president of finance Jim
Brown got a $700,000 loan from Adelphia.
\u0007 Adelphia paid Niagara Frontier Hockey LP, which owns the Sabres, $744,000
for luxury suites and tickets for employees.
\u0007 Adelphia spent $13 million to build a golf course on John Rigas' Wending
Creek property.
\u0007 The committee is investigating whether Adelphia's ACC Operations subsidiary
spent $26.5 million for timber rights on land owned by the Rigas family, and
whether the deal represented the fair market value of the rights.
\u0007 Adelphia bought 50 automobiles from Preston Motors in 2001. John Rigas owns
a material stake in the car dealer.
\u0007 Adelphia funds may have been used by the Rigas family
to construct, acquire or maintain condominiums in Beaver Creek, Colo., and
Cancun, Mexico, Adelphia said. Real estate records show that former Adelphia
chief financial officer Tim Rigas bought a $2.4 million condo in Beaver Creek in
1997 and that he got a $2.6 million mortgage to purchase another Beaver Creek
condo in December 1998.
