Adelphia releases Time Warner Cable shares
(Adds details, share movement, paragraphs 3-10)
NEW YORK, June 22 (Reuters) - Adelphia Communications Corp. (ADPAO.PK) said on Friday it has completed a "true up" mechanism under its bankruptcy reorganization, a move that will release some 23 million shares of Time Warner Cable Inc. (TWC.N) to the market.
The Time Warner Cable shares were held in reserve, or a True Up Holdback account, since the reorganization became effective in February. The shares of Class A common stock were valued at about $37.80 for purposes of the plan.
Media conglomerate Time Warner Inc. (TWX.N) spun off 16 percent of its cable division in March at a value of around $5.5 billion. The move enabled Time Warner Cable, the No. 2 U.S. cable operator, to use the stake to buy some of Adelphia's cable system assets last year.
The True Up mechanism was designed to overcome disagreements between Adelphia's creditors as to the value of the TWC stock pre-flotation.
Under the mechanism, Adelphia creditors received an initial distribution of TWC Class A shares and had the potential to receive additional shares from the True Up Holdback based on a recalculated 'Deemed Value'.
The Deemed Value is worked out as the volume weighted average price per share during market hours of the TWC Class A Common Stock during a 60-day test period.
Last month Bear Stearns analyst Spencer Wang advised clients in a note that the completion of the True Up process could be a "short term negative" for TWC stock because of the added supply of shares.
There has been market speculation that Time Warner Inc. may spin off more of its 84 percent majority ownership of the cable operator.
Time Warner Inc. Chief Executive Richard Parsons said at an investor conference earlier this month that the media conglomerate could see a complete separation from its cable arm in five years, but had not yet made a decision.
Time Warner Cable shares were down 36 cents, or .9 percent, to $39.26 in noon trading, while Time Warner Inc. was up just 1 cent to $21.52, both on the New York Stock Exchange.
((Reporting by Yinka Adegoke and Kenneth Li, editing by Tim Dobbyn; Reuters Messaging: kenneth.li.reuters.com@reuters.net; +646-223-6224; e-mail: kenneth.li@reuters.com)) Keywords: ADELPHIA/
(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN22480417
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
Follow Reuters