In The News
SOURCE: The Deal.com

PUERTO RICAN CABLE OPERATOR SOLD

By David Carey
The Deal.com
06/06/2005

Adelphia Communications Corp. and an investment partnership linked to Merrill Lynch & Co. have struck a deal to sell their cable television joint venture in Puerto Rico to two private equity firms for $520 million in cash.

The buyers, New York- and London-based MidOcean Partners and Crestview Capital Partners LLC, a fledgling New York firm that counts cable industry entrepreneur Jeffrey Marcus as a partner, will pay about $3,800 for each of the joint venture's 137,000 subscribers.

The deal comes as Adelphia prepares to emerge after three years from Chapter 11 bankruptcy protection and complete its $17.6 billion sale to Time Warner Inc. and Comcast Corp.

In late May, Greenwood Village, Colo.-based Adelphia dispensed with one major hurdle when the bankruptcy court approved a $715 million settlement of accounting fraud charges that had been lodged against the company by the U.S. government.

Adelphia acquired its 50% interest in the Puerto Rican cable operations through its 1999 acquisition of Century Communications Corp. Century and the Merrill partnership, ML Media Partners LP, teamed up in 1986 to buy the assets.

Each owned 50% of the business, Century/ML Venture.

Neither Adelphia nor ML Media Partners has disclosed Century/ML's revenue or earnings. But the investment plainly has been profitable: At the end of 2003, Adelphia valued its 50% interest at $240.5 million, $175.5 million more than it had invested.

But the JV was contentious. In 2000, ML Media Partners sued Adelphia to dissolve the venture and to appoint a receiver to sell it.

In late 2001, Adelphia agreed to buy out ML Media Partners for between $275 million and $279.8 million. That pact fell apart when Century/ML sought bankruptcy protection in September 2002. The battle resumed.

Early last year, ML Media Partners said it had rounded up a prospective buyer, an investor group led by James C. Vaughn. But that group got cold feet.

The adversaries, meanwhile, have continued to press their cases in court. Spokesmen for Adelphia, ML Media and MidOcean did not say whether the deal to sell Century/ML meant that hostilities will cease.

Officials at MidOcean and Crestview were unavailable for comment.

Citigroup Inc. and J.P. Morgan Chase & Co. are arranging debt financing for the buyout, which is subject to approval by regulators and by the U.S. Bankruptcy Court for the Southern District of New York.

Lazard advised Adelphia and Daniels & Associates advised ML Media. Willkie Farr & Gallagher LLP's Maurice Lefkort was counsel to Adelphia. Proskauer Rose LLP's Jeffrey Levitan, Bertram Abrams, Lawrence Budish, Bradley Ruskin and Scott Eggers were counsel to ML Media Partners.

MidOcean and Crestview tapped DH Capital LLC for financial advice.

The buyers' legal team consisted of Kirkland & Ellis LLP's George P. Stamas, Mark D. Director, Thomas L. Evans, Matthew N. Kleiman and Christopher Butler.