Standard & Poor's lowers Adelphia's credit rating

NEW YORK - Standard & Poor&#39;s on Monday lowered the corporate credit rating on Adelphia Communications Corp. from double &#39;B&#39;-minus to single-&#39;B&#39; due to concerns over borrowing by company subsidiaries and firms owned by relatives of the founder. <br> <br> The rating for Adelphia, which recently revealed $2.3 billion in off-the-books debt, remains on CreditWatch, but the implications were revised from negative to developing, meaning the rating may be raised or lowered. <br> <br> &#34;The downgrade is based on our assessment that the off-balance-sheet debt issue has materially weakened the company&#39;s overall financial profile,&#34; Standard & Poor&#39;s credit analyst Richard Siderman said. &#34;While analytical consolidation of the off-balance-sheet debt would result in limited weakening of financial parameters, given investor reaction to the disclosures, Standard & Poor&#39;s views Adelphia&#39;s financial flexibility to be severely impaired, at least for the near term.&#34; <br> <br> The firm also cited Adelphia&#39;s request for an extension in filing its annual 10-K financial report to review accounting for the debt, the SEC opening an informal investigation, a number of lawsuits being filed, and retention of investment advisers to explore possible asset sales and other debt-reduction measures. <br> <br> If the $2.3 billion balance increases much this year, Standard & Poor&#39;s &#34;has concerns that a parent debt covenant limiting indebtedness to no more than 8.75 times annualized pro forma EBITDA, could be increasingly difficult to meet,&#34; the firm said. Adelphia officials say they believe the company will be in compliance with the covenant for the first quarter, S&P said. <br> <br> The family of John J. Rigas -- the founder, chairman and chief executive officer of the nation&#39;s sixth largest cable television company -- borrowed the money through arrangements with family-controlled partnerships that would leave Adelphia liable should the partnerships be unable to meet the debt obligations. <br> <br> Adelphia announced late Thursday that it had hired Salomon Smith Barney, Bank of America Securities and Credit Suisse First Boston as financial advisers to explore ways to reduce debt, including possible cable asset sales. The company also said it engaged Daniels & Associates as a special adviser. <br> <br> Adelphia has cable television systems with more than 5.7 million subscribers in 32 states and Puerto Rico. The company also offers digital television service and high-speed Internet access over cable, and resells long-distance phone and paging services. <br> <br> ------ <br> <br> On the Net: <br> <br> http://www.adelphia.com/cable <br> <br>