Adelphia Communications Corp. founder John Rigas is stepping down as chairman
and CEO as the company plunges into further disarray.
Adelphia announced that it was suspending auditor Deloitte & Touche LLP's
2001 audit so that it could conduct 'an investigation of issues raised in
connection with the preparation of its 10-K statement.'
Wall Street executives took this to mean that the auditors have found
something even more troubling than Adelphia's insider dealing with the Rigas
family than has already been disclosed.
This statement was made as if somehow, the senior executives at the company
(mostly members of the Rigas family) didn't intimately know the issues Deloitte
The company has also hired heavy-hitting lawyer David Boies of Boies,
Schiller & Flexner LLP 'to advise it in connection with its investigation
and other matters.'
Boies is best known for representing the U.S. government in its antitrust
case against Microsoft Corp. He is representing 'the company,' rather than, say,
the board or outside directors.
NASDAQ blocked Adelphia's shares from trading all day Wednesday, saying that
it needed more information. Conveniently, Adelphia is scheduled for a hearing
Thursday on the exchange's decision to delist the company from its National
Debt-ratings agency Moody's Investors Service Inc. slashed Adelphia's grades,
cautioning that 'the prospect of a potential bankruptcy filing is more likely
and may ultimately be unavoidable.'
Adelphia's bonds sank on the news, with one series trading at just 65 cents
on the dollar. 'The traders are telling you that there's no equity left in this
company,' one high-yield bond analyst said.
Replacing Rigas as CEO is board member and retired banker Erland 'Erkie'
Kailbourne, 56, spent 37 years in regional banking and is a significant
player in Buffalo, N.Y., where Adelphia has sizable operations. He's been on
Adelphia's board since 1999, and he has also been chair of the board's audit