(Cebridge) Kent, partners to bid on Adelphia assets
[cebridge is partnering with ntop on cable telephony; as is Bresnan Communications]
Cebridge has backing from Goldman Sachs, Oaktree
By Rick Desloge
St. Louis Business Journal
Updated: 8:00 p.m. ET Sept. 5, 2004
Jerry Kent is expected to take another step in expanding his company's cable TV holdings.
Cebridge Connections, the cable TV portion of Kent's Cequel III management group, expects to be among the firms bidding on some of Adelphia Communications Corp.'s cable systems when a bankruptcy auction for those systems starts next month. Cebridge has backing from Oaktree Capital Management and a private equity arm of Goldman Sachs & Co., said Kent, Cequel's chief executive.
"We're interested in expanding our cable company," he said, "and we're going to look at any opportunity that comes our way."
In February, Cebridge Connections received a commitment for up to $125 million in new equity primarily from Goldman Sachs Capital Partners. Company officials said the capital would be used for acquisitions and to improve technology and operations.
Kent confirmed his company has requested bid documents for Adelphia assets, but declined to disclose which systems the privately held Cebridge might try to buy. The company is expected to be competing against cable industry giants such as Comcast Corp., the largest cable firm in the country with 21.5 million subscribers, and No. 2 company Time Warner Inc., with nearly 11 million subscribers.
Cebridge, with about 480,000 cable TV subscribers in 23 states, is one of the smaller cable TV firms expected to request bid packages from Adelphia. Adelphia, based in Denver, has been in bankruptcy since June 2002, following an accounting scandal that also led to criminal indictments of members of the Rigas family, which founded Adelphia.
"If we're successful in buying properties from Adelphia, we'll move the headquarters of the operation to St. Louis, so we can tap the local employment base," Kent said. Adelphia has cable systems nationwide, including in New England, Florida, Colorado and Southern California.
Cebridge has expanded in St. Louis during the last three years with backing from both Oaktree and Goldman Sachs, said Pete Abel, a spokesman for Cequel. Cequel's other company is AAT Communications, a cellular tower business with operations in New Jersey. The cable TV and cell tower businesses combined have 100 employees in St. Louis.
Charter Communications, with 6.5 million subscribers, also is expected to bid for Adelphia operations in California, said Mike Kupinski, a media and entertainment analyst with A.G. Edwards & Sons. Kupinski said he expects Time Warner Inc. to bid on the entire Adelphia operation, with some 5.4 million subscribers, and combine it with Time Warner's systems. It likely would then sell off some of the pieces to smaller companies such as Cebridge. He questioned whether Adelphia would want to sell the system piecemeal, because it would make some smaller Adelphia systems less attractive to buyers.
Charter specifically is interested in Adelphia's Los Angeles-area cable systems, he said. "(Los Angeles is) a fragmented market with many players. It needs to be consolidated," Kupinski said. Consolidation would allow cable operators to compete more effectively against satellite companies, which can market dish receivers to all of Southern California, he said.
A spokesman for Charter could not be reached for comment about its interest in Adelphia operations.
In addition to Cebridge, at least two other cable company veterans backed by private equity firms are expected to bid on Adelphia assets, according to the Wall Street Journal. Bill Bresnan, who operates Bresnan Communications based in Purchase, N.Y., is working with Providence Equity Partners, and Steven Simmons, who operates Patriot Media & Communications in New Jersey, is working with Spectrum Equity investors.
The auction was set in motion July 14 when Adelphia retained financial advisers from UBS Investment Bank LLC, Allen & Co. LLC and Sullivan & Cromwell LLP for the sale of the company. The auction is expected to bring between $17 billion and $20 billion, according to trade reports on the anticipated sales.
Los Angeles-based Oaktree backed Cebridge on Cequel's acquisition of Classic Cable in January 2003. Classic, too, was in bankruptcy. Since then, Cebridge has acquired a succession of rural and suburban cable companies and upgraded their systems to offer broadband and phone services.
Last year, Cebridge bought several Houston-area cable systems from Shaw Communications Inc. In January, Cebridge paid $78 million for 78,000 customers of Alliance Communications Partners. It also bought about 13,000 customers from Thompson Cablevision. |
