Adelphia Communications' telephone unit warned that its huge debt load may
drag the company under.
In an SEC filing, Adeplphia Business Solutions' said its litany of demands on its cash and the failure to secure bank loans "raise substantial doubt about the Company's ability to continue as a going concern."
That's a hot-button phrase that generally foretells a
drastic financial restructuring, usually in bankruptcy court.
The division, which is 78% owned by Adelphia, has been an albatross ever since it became clear that the competitive business telephone business was a black hole for many late entrants.
Adelphia Business said it has the resources to meet $85
million in funding requirements for the remainder of the year.
Though the company has $99 million in the bank, after selling some phone network assets to the cable company for $80 million.
But Adelphia Business has been unable to raise between
$300 million and $500 million from banks, as it hoped to do.
The phone unit has generated around $500 million in operating losses and spent another $1.4 billion in capital investments. It has halved the number of markets it planned to wire, down to 80.
Adelphia Communications said last week it planned to spin the telephone unit off by March, but it's not clear what might be left to spin off by then.
- John M. Higgins