Adelphia May Settle With SEC, DOJ for $300M
WASHINGTON – Adelphia Communications Corp. (search) has offered $300 million to settle investigations by the Securities and Exchange Commission and the Justice Department, the company said.
The company is in settlement talks with both agencies to quash civil penalties over alleged securities violations by members of the founding Rigas family, according to a 2003 annual report released by the company Thursday.
Adelphia said that $125 million of the settlement offer would be funded by litigation waged on the company's behalf.
Adelphia said the SEC (search) has filed claims in the company's Chapter 11 bankruptcy case that could total billions of dollars. The SEC's lawsuit has been tabled by a U.S. District Court until April 29. The annual report said the SEC's action isn't covered by bankruptcy protection against creditors.
Adelphia, which is based in Greenwood Village, Colo., said the Justice Department's (search) investigation could include the criminal indictment of the company and cable properties owned by the Rigases and managed by Adelphia. The Justice Department could also impose monetary remedies such as fines and restitution, and criminal and civil forfeiture, the annual report said.
The Wall Street Journal reported that earlier this year government lawyers said they would seek as much as $1 billion from Adelphia, according to people familiar with the talks. The company countered with an offer last summer in the range of $100 million to $200 million.
In the company's first audited financial statement since 2002, the cable provider reported losses of $7.25 billion in 2002 and $6.17 billion in 2001. Adelphia also reported a 2003 net loss of $839.9 million, or $3.31 a share, on revenue of $3.6 billion.
In July, John and Timothy Rigas, two of the founding members of Adelphia, were found guilty of looting the company of more than $100 million and hiding over $2 billion in debt. A federal judge has postponed sentencing for the father and son until Feb. 23. John Rigas' (search) other son, Michael, is scheduled to be retried next year because of a deadlocked jury trial this summer.
After months of attempting to frame a reorganization strategy as a stand-alone company, Adelphia has put its cable properties out for bid and recently said a sale could close in the fourth quarter of 2005. Rivals Comcast Corp. (CMCSA) and Time Warner (TWX) have said they want to make a joint offer.