In an effort to help pay down the debt of its troubled competitive local-exchange carrier subsidiary, Adelphia Communications Corp. agreed to buy some network and telecommunications assets of Adelphia Business Solutions Inc. for $88.5 million.
The assets are located in Virginia, Ohio, Colorado and California-markets that Adelphia Business, also known as ABIZ, has said it will not pursue as part of its scaled-down expansion plans.
ABIZ will use the proceeds to pay down debt.
Like others in the CLEC sector, ABIZ was hit hard by a constrained capital market and the high cost of building out its network. Late last year, Adelphia said it would reduce 2001 capital expenditures at ABIZ from $675 million to between $450 million and $500 million.
In a separate transaction, Adelphia said it would purchase the rights to an additional 63 million shares of ABIZ common stock for $461 million. Adelphia owns about 59 percent of the CLEC's outstanding stock.
Adelphia stock was down 75 cents per share to $43.75 in morning trading on Feb. 22. ABIZ stock was down 56 cents each to $5.44.
"We believe that the transaction between ABIZ and Adelphia Communications is further evidence of the operational and financial integration between the CLEC and the cable parent, and we continue to view the two companies as one entity," UBS Warburg high-yield cable analyst Aryeh Bourkoff said in a report. "We expect ABIZ to continue to benefit from the collaboration with Adelphia."
