<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1997
REGISTRATION NO. 333-26467
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 4841 23-2417713
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
------------
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
COLIN H. HIGGIN, ESQUIRE
ADELPHIA COMMUNICATIONS CORPORATION
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
CARL E. ROTHENBERGER, JR., ESQUIRE
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
21ST FLOOR, 301 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8826
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, please check the following box. [_]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION
CROSS REFERENCE SHEET PURSUANT TO RULE 404(a) AND ITEM 501 OF REGULATION S-K,
SHOWING THE LOCATION IN THE PROSPECTUS OF THE INFORMATION REQUIRED TO BE
INCLUDED THEREIN IN ACCORDANCE WITH PART I OF FORM S-4.
<TABLE>
<CAPTION>
FORM S-4
ITEM NUMBER AND CAPTION LOCATION OR HEADING IN THE PROSPECTUS
---------------------------------------- -------------------------------------------
<S> <C> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.. Forepart of Registration Statement; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front and Outside Back Cover Pages
of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information........... Forepart of Prospectus; Prospectus Summary;
Risk Factors; Selected Consolidated
Financial Data
4. Terms of the Transaction................ Prospectus Summary; The Exchange Offer;
Description of Senior Notes; Certain
Federal Income Tax Considerations; Risk
Factors
5. Pro Forma Financial Information......... *
6. Material Contracts with Company Being
Acquired................................ *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters...................... Plan of Distribution
8. Interests of Named Experts and Counsel.. *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. *
10. Information with Respect to S-3
Registrants............................. Incorporation by Reference; Risk Factors;
Recent Developments; Selected Consolidated
Financial Data
11. Incorporation of Certain Information by
Reference............................... Incorporation by Reference
12. Information with Respect to S-2 or S-3
Registrants............................. *
13. Incorporation of Certain Information by
Reference............................... *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4
ITEM NUMBER AND CAPTION LOCATION OR HEADING IN THE PROSPECTUS
---------------------------------------- -------------------------------------------
<S> <C> <C>
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants....... *
15. Information with Respect to S-3
Companies............................... *
16. Information with Respect to S-2 or S-3
Companies............................... *
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies......... *
18. Information if Proxies, Consents or
Authorizations are to be Solicited...... *
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer................. Incorporation by Reference; The Exchange
Offer
</TABLE>
- --------
* Item is omitted because the answer is negative or the item is inapplicable.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 31, 1997
OFFER TO EXCHANGE
9 7/8% SERIES B SENIOR NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING 9 7/8% SENIOR NOTES DUE 2007
OF
ADELPHIA COMMUNICATIONS CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
Adelphia Communications Corporation ("Adelphia", the "Company", the
"Registrant" or the "Issuer") hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange
$1,000 principal amount of 9 7/8% Series B Senior Notes due 2007 of the
Registrant (the "New Notes") for each $1,000 principal amount of the issued and
outstanding 9 7/8% Senior Notes due 2007 (the "Old Notes," and collectively
with the New Notes, the "Senior Notes"). Interest on the Senior Notes is
payable semi-annually commencing September 1, 1997 with a final maturity date
of March 1, 2007. As of the date of this Prospectus, $350,000,000 aggregate
principal amount of the Old Notes is outstanding. The terms of the New Notes
and the Old Notes are substantially identical in all material respects, except
for certain transfer restrictions and registration rights; and except that
holders of Old Notes are entitled to receive Liquidated Damages (as defined) if
(a) the Registrant fails to file any of the registration statements required by
the Registration Rights Agreement (as defined) on or before the date specified
for such filing, (b) any of such registration statements is not declared
effective by the Securities and Exchange Commission (the "Commission") on or
prior to the date specified for such effectiveness (the "Effectiveness Target
Date"), (c) the Registrant fails to consummate the Exchange Offer within 30
business days of the Effectiveness Target Date with respect to the Exchange
Offer registration statement, or (d) a shelf registration statement or the
registration statement of which this Prospectus forms a part (the "Exchange
Offer Registration Statement") is declared effective but thereafter ceases to
be effective or usable in connection with resales of Transfer Restricted
Securities (as defined) during the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (a) through (d) above a
"Registration Default"). In the event of a Registration Default, the Registrant
is required to pay Liquidated Damages to each holder of Transfer Restricted
Securities for the period that the Registration Default continues, with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, at a rate of 0.25% per annum on the principal amount of
Transfer Restricted Securities held by such holder. Such interest rate will
increase by an additional 0.25% per annum at the beginning of each subsequent
90-day period up to a maximum aggregate increase of 2.0% per annum until such
Registration Defaults have been cured, at which time the interest rate borne by
the Old Notes will be reduced to the original interest rate. See "Description
of Senior Notes-Registration Rights; Liquidated Damages."
(Continued on following page)
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
The Exchange Offer is being made to satisfy certain obligations of the
Registrant under the Registration Rights Agreement, dated as of February 26,
1997, among the Registrant and the Initial Purchaser (the "Registration Rights
Agreement"). Upon consummation of the Exchange Offer, holders of Old Notes
that were not prohibited from participating in the Exchange Offer and did not
tender their Old Notes will not have any registration rights under the
Registration Rights Agreement with respect to such nontendered Old Notes and,
accordingly, such Old Notes will continue to be subject to the restrictions on
transfer contained in the legend thereon.
Based on interpretations by the staff of the Commission with respect to
similar transactions, including no action letters, the Registrant believes
that the New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by any
holder of such New Notes (other than any such holder which is an "affiliate"
of the Registrant within the meaning of Rule 405 under the Securities Act of
1933, as amended (the "Securities Act")) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business, such holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes and neither the
holder nor any other person is engaging in or intends to engage in a
distribution of the New Notes. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes must acknowledge that it will
deliver a prospectus in connection with any resale of its New Notes. A broker-
dealer who acquired Old Notes directly from the Registrant can not exchange
such Old Notes in the Exchange Offer. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of the
New Notes received in exchange for the Old Notes acquired by the broker-dealer
as a result of market-making activities or other trading activities. The
Registrant has agreed that they will make this Prospectus available to any
broker-dealer for use in connection with any such resale for a period of 365
days after the Exchange Date (as defined) or, if earlier, until all
participating broker-dealers have so resold. See "Plan of Distribution."
The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture (as defined). For a more complete
description of the terms of the New Notes, see "Description of Senior Notes."
There will be no cash proceeds to the Registrant from the Exchange Offer. The
New Notes will be senior unsecured indebtedness of Adelphia, will rank pari
passu in right of payment with other unsubordinated indebtedness of Adelphia
and senior in right of payment to all future subordinated indebtedness of
Adelphia. The operations of Adelphia are conducted through its subsidiaries
and, therefore, Adelphia is dependent on the earnings and cash flow of and
distributions from its subsidiaries to meet its debt obligations, including
its obligations with respect to the New Notes. Because the assets of its
subsidiaries constitute substantially all of the assets of Adelphia, and
because the subsidiaries will not guarantee the payment of principal of and
interest on the New Notes, the claims of holders of the New Notes effectively
will be subordinated to the claims of creditors of such entities. As of March
31, 1997, the New Notes would have been effectively subordinated to $1.2
billion of indebtedness of Adelphia's subsidiaries. As of March 31, 1997, the
total indebtedness of Adelphia's subsidiaries to banks and institutions, on a
consolidated basis, aggregated $1.2 billion.
The Old Notes were originally issued and sold on February 26, 1997 in an
offering of $350,000,000 aggregate principal amount (the "Offering," as
defined). The Offering was exempt from registration under the Securities Act
in reliance upon the exemptions provided by Rule 144A, Section 4(2) and
Regulation S of the Securities Act. Accordingly, the Old Notes may not be
reoffered, resold or otherwise pledged, hypothecated or transferred in the
United States unless so registered or unless an exemption from the
registration requirements of the Securities Act and applicable state
securities laws is available.
The Registrant has not entered into any arrangement or understanding with
any person to distribute the New Notes to be received in the Exchange Offer,
and to the best of the Registrant's information and belief, each person
participating in the Exchange Offer is acquiring the New Notes in its ordinary
course of business and has no arrangement or understanding with any person to
participate in the distribution of the New Notes to be
2
<PAGE>
received in the Exchange Offer. Any person participating in the Exchange Offer
who does not acquire the Exchange Notes in the ordinary course of business:
(i) cannot rely on the above referenced no action letters; (ii) cannot tender
its Old Notes in the Exchange Offer; and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 p.m., New York City time, on , 1997, unless extended
(as it may be so extended, the "Expiration Date"), provided that the Exchange
Offer shall not be extended beyond 30 business days from the date of this
Prospectus. The date of acceptance for exchange of the Old Notes for the New
Notes (the "Exchange Date") will be the first business day following the
Expiration Date. Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date; otherwise such tenders are
irrevocable.
Prior to this Exchange Offer, there has been no public market for the Senior
Notes. The Old Notes have traded on the PORTAL Market. If a market for the New
Notes should develop, the New Notes could trade at a discount from their
initial offering price. The Company does not intend to apply for listing of
the New Notes on any securities exchange or in any automated quotation system.
There can be no assurance that an active trading market for the New Notes will
develop.
----------------
AVAILABLE INFORMATION
The Company has filed with the Commission in Washington, D.C. a Registration
Statement on Form S-4 under the Securities Act with respect to the Exchange
Offer. This Prospectus, which is part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and the Exchange Offer, reference is made to such Registration
Statement and the exhibits and schedules filed as part thereof. The
Registration Statement and the exhibits and schedules thereto filed with the
Commission may be inspected without charge at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and will also be available for inspection and copying
at the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York, New York 10048, and the Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any
portion of the Registration Statement may be obtained from the Public
Reference Section of the Commission upon payment of certain prescribed fees.
Electronic registration statements made through the Electronic Data Gathering,
Analysis, and Retrieval system are publicly available through the Commission's
Web site (http://www.sec.gov), which is maintained by the Commission and which
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE REGISTRANT ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES LAWS OF SUCH JURISDICTION.
INCORPORATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference: (a) Annual Report on
Form 10-K for the fiscal year ended March 31, 1997 which incorporates, in
Items 7 and 8 to such Form 10-K, portions of Amendment No. 2 to Registration
Statement No. 333-19327 of Olympus Communications, L.P. and Olympus Capital
Corporation on Form S-4 (the "Form 10-K"); (b) Adelphia's amendment to Form
10-K filed July 29, 1997 (the "Form 10-K/A"); (c) Adelphia's
3
<PAGE>
Current Report on Form 8-K for the event dated July 24, 1997; (d) Adelphia's
Current Report on Form 8-K for the event dated July 7, 1997; (e) Adelphia's
Current Report on Form 8-K for the event dated June 23, 1997; and (f) the
descriptions of the Company's Common Stock contained in the registration
statements filed under Section 12(g) of the 1934 Act, including any amendments
or reports for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the respective date of filing of each such
document. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is, or is deemed
to be, incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
MICHAEL C. MULCAHEY, DIRECTOR OF ACCOUNTING AND ASSISTANT TREASURER, ADELPHIA
COMMUNICATIONS CORPORATION, MAIN AT WATER STREET, COUDERSPORT, PA 16915,
TELEPHONE NUMBER 814-274-9830. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE NO LATER THAN 5 BUSINESS DAYS PRIOR TO
THE EXPIRATION OF THE EXCHANGE OFFER.
4
<PAGE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements appearing in this Prospectus or
incorporated by reference herein. The Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" for forward-looking statements. Certain
information included or incorporated by reference in this Prospectus, including
Management's Discussion and Analysis of Financial Condition and Results of
Operations, is forward-looking, such as information relating to the effects of
future regulation, future capital commitments and the effects of competition.
Such forward-looking information involves important risks and uncertainties
that could significantly affect expected results in the future from those
expressed in any forward-looking statements made by, or on behalf of, the
Company. These risks and uncertainties include, but are not limited to,
uncertainties relating to economic conditions, acquisitions and divestitures,
government and regulatory policies, the pricing and availability of equipment,
materials, inventories and programming, technological developments and changes
in the competitive environment in which the Company operates. Persons
participating in this Exchange Offer are cautioned that such statements are
only predictions and that actual events or results may differ materially. In
evaluating such statements, persons participating in this Exchange Offer should
specifically consider the various factors which could cause actual events or
results to differ materially from those indicated by such forward looking
statements. Persons participating in this Exchange Offer should carefully
consider the factors set forth herein under the caption "Risk Factors."
THE COMPANY
The Company is the seventh largest cable television operator in the United
States. As of March 31, 1997, cable television systems owned or managed by the
Company (the "Systems") in the aggregate passed 2,653,422 homes and served
1,868,440 basic subscribers. John J. Rigas, the Chairman, President, Chief
Executive Officer and founder of Adelphia, has owned and operated cable
television systems since 1952.
The Company's owned cable systems (the "Company Systems") are located in ten
states and are organized into seven regional clusters: Western New York,
Virginia, Western Pennsylvania, New England, Eastern Pennsylvania, Ohio and
Coastal New Jersey. The Company Systems are located primarily in suburban areas
of large and medium-sized cities within the 50 largest television markets. As
of March 31, 1997, the Company Systems passed 1,569,953 homes and served
1,138,414 basic subscribers.
The Company also provides, for a fee, management and consulting services to
certain partnerships and certain corporations engaged in the ownership and
operation of cable television systems (the "Managed Partnerships"). John J.
Rigas and certain members of his immediate family, including entities they own
or control (collectively the "Rigas Family") have substantial ownership
interests in the Managed Partnerships. As of March 31, 1997, cable systems (the
"Managed Systems") owned by the Managed Partnerships passed 432,727 homes and
served 313,266 basic subscribers.
In addition to its wholly-owned cable operations, Adelphia has other
significant investments including:
OLYMPUS COMMUNICATIONS, L.P.
The Company owns a 50% voting interest and nonvoting Preferred Limited
Partnership interests entitling the Company to a 16.5% preferred return in
Olympus. Olympus is a joint venture limited partnership between the Company and
subsidiaries of FPL Group, Inc. (together with its subsidiaries, "FPL Group").
Olympus is not a subsidiary of Adelphia or FPL Group. Olympus operates the
largest contiguous cable system in Florida and is located in some of the
fastest growing markets in Florida. As of March 31, 1997, the Olympus systems
passed 650,742 homes and served 416,760 basic subscribers. The Company's
investment in Olympus is
5
<PAGE>
accounted for under the equity method of accounting. On November 12, 1996,
Olympus realized proceeds of $195,500,000 upon the issuance of $200,000,000 in
aggregate principal amount of 10 5/8% Senior Notes due November 15, 2006. The
net proceeds from such offering were used to reduce outstanding bank borrowings
of Olympus' subsidiaries.
HYPERION TELECOMMUNICATIONS, INC.
The Company owns an 88% interest in Hyperion Telecommunications, Inc.
("Hyperion"), a leading Competitive Local Exchange Carrier ("CLEC") that
designs, constructs, operates and manages state-of-the-art, fiber optic
networks and facilities. Hyperion operates one of the largest CLECs in the
United States based upon route miles and buildings connected. Hyperion
currently manages and operates 21 networks (including six under construction),
serving 33 cities. As of March 31, 1997, these networks had approximately 3,461
route miles, approximately 1,270 buildings. Hyperion is consolidated in
Adelphia's financial results and is currently an unrestricted subsidiary of
Adelphia for purposes of Adelphia's indentures. On April 15, 1996, Hyperion
realized net proceeds of $168,600,000 upon the issuance of $329,000,000 in
aggregate principal amount of 13% Senior Discount Notes (the "Hyperion Senior
Notes") due April 15, 2003 and 329,000 warrants to purchase an aggregate of
613,427 shares of common stock of Hyperion expiring April 1, 2001. Net proceeds
from such offering were used to repay a portion of outstanding indebtedness
owed to Adelphia, fund capital expenditures, working capital requirements,
operating losses, pro rata investments in operating companies and pro rata
equity investments.
EMPIRE SPORTS NETWORK AND BUFFALO SABRES NHL FRANCHISE AND MARINE MIDLAND ARENA
Empire Sports Network ("Empire") is a majority-owned subsidiary of Adelphia
operating a regional sports television network serving western and central New
York. Empire's most popular programming is the Buffalo Sabres (the "Sabres")
NHL team games and related coverage. As of March 31, 1997, Adelphia made
$31,000,000 of preferred equity investments and loans to Niagara Frontier
Hockey, L.P. ("Niagara L.P.") which holds the NHL Sabres franchise. The
Company's investment in Niagara L.P. is accounted for under the cost method.
Niagara L.P. also holds a two-thirds interest in the Marine Midland Arena
complex, a recently opened $130,000,000 sports and entertainment facility
capable of seating 18,500 people with 60 luxury suites. The complex holds a
right of first refusal for hosting all arena events in Buffalo.
Adelphia was incorporated in Delaware on July 1, 1986 for the purpose of
reorganizing five cable television companies, then principally owned by the
Rigas Family, into a holding company structure in connection with the initial
public offering of Adelphia's Class A Common Stock. The Company's executive
offices are located at Main at Water Street, Coudersport, Pennsylvania 16915,
and its telephone number is (814) 274-9830.
RECENT DEVELOPMENTS
$150 Million Offering of Notes and $150 Million Exchangeable Preferred
Stock. On July 7, 1997, Adelphia announced the sale of $150,000,000 in 10 1/2%
Senior Notes due 2004 to institutional investors in reliance on Rule 144A and
13% Series A Cumulative Exchangeable Preferred Stock (the "Exchangeable
Preferred Stock") with an aggregate liquidation preference of $150,000,000 to
institutional investors in reliance on Rule 144A and to an affiliate of the
family of John Rigas, Chairman of Adelphia. The non-interest terms of the 10
1/2% Senior Notes due 2004 will be similar to those of its existing publicly
held senior debt.
Adelphia also announced the sale of perpetual Series C Cumulative Convertible
Preferred Stock (the "Convertible Preferred Stock") with an aggregate
liquidation preference of $100,000,000 in a private placement to the Rigas
family affiliate and Telesat Cablevision, Inc. ("Telesat"), a wholly owned
subsidiary of FPL Group, Inc., a New York Stock Exchange company. The
Convertible Preferred Stock will accrue dividends at the rate of 8 1/8% of the
liquidation preference per annum, and will be convertible at $8.48 per share
into an aggregate of
6
<PAGE>
11,792,450 shares of Class A Common Stock of Adelphia. The Convertible
Preferred Stock is redeemable at the option of Adelphia after three years from
the date of issuance at a premium declining to par. The closing of the
offerings of 10 1/2% Senior Notes due 2004 and Exchangeable Preferred Stock
were both conditioned on the completion of the sale of the Convertible
Preferred Stock.
Acquisition of Cable Systems. On June 20, 1997, Adelphia acquired cable
systems from Booth Communications Company serving 25,800 subscribers in the
Virginia cities of Blacksburg and Salem. These systems were acquired for an
aggregate purchase price of $54,500,000 comprised of 3,571,428 shares of
Adelphia's Class A Common Stock and $29,500,000 cash. The acquisition was
accounted for under the purchase method of accounting.
Sale of Interest in Page Call. On June 11, 1997, the Company announced its
agreement to sell its 49.9% ownership in Page Call, Inc. for a total of
$16,500,000 payable in Series A Convertible Preferred Stock of Arch
Communications Group, Inc. and cash. The Company expects to complete this
transaction in 1997, subject to regulatory approvals.
TCI Partnership. On June 6, 1997, Adelphia signed a letter of intent to
establish a partnership into which Tele-Communications, Inc. ("TCI") will
contribute its cable systems in Buffalo, New York; Erie, Pennsylvania; and
Ashtabula and Lake County, Ohio, totaling 166,000 subscribers, and Adelphia
will contribute its Western New York and Lorain, Ohio systems, totaling 298,000
subscribers. Upon closing of the transaction, TCI will hold a minority interest
in the partnership. Adelphia will manage the partnership and expects to
consolidate the partnership's results for financial reporting purposes. The
venture will serve approximately 464,000 customers.
Exchange of Cable Systems with Time Warner Cable. On May 20, 1997, Adelphia
and its affiliates and Timer Warner Cable companies entered into agreements
involving a trade of cable systems in seven states covering approximately
250,000 subscribers, an exchange of interests in four Competitive Local
Exchange Carrier ("CLEC") networks in New York state, and cash. Adelphia will
exchange its systems serving 67,600 subscribers primarily in the Mansfield,
Ohio area for systems owned by Time Warner Cable companies serving 72,400
subscribers adjacent to systems owned or managed by Adelphia in Virginia, New
England and New York. Also, Hyperion has agreed with a Time Warner company to
an exchange of interests in four CLEC networks in New York. In this
transaction, Hyperion will increase its interests in its Buffalo and Syracuse
CLEC networks to 50% and 100%, respectively, and will eliminate its interests
in the Albany and Binghamton networks. Certain affiliates managed by Adelphia
will exchange systems serving 49,700 subscribers in Syracuse, New York and
Henderson, North Carolina for Time Warner cable systems serving 57,900
subscribers adjacent to systems owned or managed by Adelphia in western
Pennsylvania and Virginia. Consummation of this transaction is subject to
certain closing conditions and regulatory approval.
7
<PAGE>
THE EXCHANGE OFFER
Securities Offered.......... Up to $350,000,000 aggregate principal amount
of 9 7/8% Series B Senior Notes due 2007 of
the Company (the "New Notes," and
collectively with the Old Notes, the "Senior
Notes"). The terms of the New Notes and the
Old Notes are substantially identical in all
material respects, except for certain
transfer restrictions, registration rights
and liquidated damages ("Liquidated Damages")
for Registration Defaults relating to the Old
Notes which will not apply to the New Notes.
See "Description of Senior Notes."
The Exchange Offer..........
The Registrant is offering to exchange $1,000
principal amount of New Notes for each $1,000
principal amount of Old Notes. See "The
Exchange Offer" for a description of the
procedures for tendering Old Notes. The
Exchange Offer satisfies the registration
obligations of the Registrant under the
Registration Rights Agreement. Upon
consummation of the Exchange Offer, holders
of Old Notes that were not prohibited from
participating in the Exchange Offer and did
not tender their Old Notes will not have any
registration rights under the Registration
Rights Agreement with respect to such
nontendered Old Notes and, accordingly, such
Old Notes will continue to be subject to the
restrictions on transfer contained in the
legend thereon.
Tenders, Expiration Date; The Exchange Offer will expire at 5:00 p.m.,
Withdrawal................. New York City time, on , 1997, or
such later date and time to which it is
extended, provided that the Exchange Offer
shall not be extended beyond 30 business days
from the date of this Prospectus. Tender of
Old Notes pursuant to the Exchange Offer may
be withdrawn and retendered at any time prior
to the Expiration Date. Any Old Notes not
accepted for exchange for any reason will be
returned without expense to the tendering
holder as promptly as practicable after the
expiration or termination of the Exchange
Offer.
Federal Income Tax The Exchange Offer will not result in any
Considerations.............. income, gain or loss to the holders of Senior
Notes or the Company for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."
Use of Proceeds............. There will be no proceeds to the Company from
the exchange of New Notes for the Old Notes
pursuant to the Exchange Offer.
Exchange Agent.............. Bank of Montreal Trust Company, the Trustee
under the Indenture, is serving as exchange
agent (the "Exchange Agent") in connection
with the Exchange Offer.
8
<PAGE>
CONSEQUENCES OF EXCHANGING OR FAILURE TO EXCHANGE OLD NOTES PURSUANT TO THE
EXCHANGE OFFER
Generally, holders of Old Notes (other than any holder who is an "affiliate"
of the Registrant within the meaning of Rule 405 under the Securities Act) who
exchange their Old Notes for New Notes pursuant to the Exchange Offer may offer
their New Notes for resale, resell their New Notes, and otherwise transfer
their New Notes without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided such New Notes are acquired
in the ordinary course of the holder's business, such holders have no
arrangement with any person to participate in a distribution of such New Notes
and neither the holder nor any other person is engaging in or intends to engage
in a distribution of the New Notes. A broker-dealer who acquired Old Notes
directly from the Registrant can not exchange such Old Notes in the Exchange
Offer. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that it will deliver a prospectus in
connection with any resale of its New Notes. See "Plan of Distribution." To
comply with the securities laws of certain jurisdictions, it may be necessary
to qualify for sale or register the New Notes prior to offering or selling such
New Notes. The Company is required, under the Registration Rights Agreement, to
register the New Notes in any jurisdiction requested by the holders, subject to
certain limitations. Upon consummation of the Exchange Offer, holders that were
not prohibited from participating in the Exchange Offer and did not tender
their Old Notes will not have any registration rights under the Registration
Rights Agreement with respect to such nontendered Old Notes, and accordingly,
such Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general, Old Notes may not be offered or
sold, unless registered under the Securities Act and applicable state
securities laws. See "The Exchange Offer--Consequences of Failure to Exchange."
9
<PAGE>
SUMMARY DESCRIPTION OF SENIOR NOTES
Issuer................................ Adelphia Communications Corporation
Securities Offered.................... Up to $350,000,000 principal amount
of 9 7/8% Series B Senior Notes due
2007 of the Registrant (the "New
Notes," and collectively with the
Old Notes, the "Senior Notes"). The
terms of the New Notes and the Old
Notes are substantially identical
in all material respects, except
for certain transfer restrictions,
registration rights and Liquidated
Damages for Registration Defaults
relating to the Old Notes which
will not apply to the New Notes.
See "Description of Senior Notes."
Maturity Date......................... The Senior Notes will mature on
March 1, 2007.
Interest.............................. The Senior Notes will bear interest
at a rate of 9 7/8% per annum,
payable semi-annually, in cash on
March 1 and September 1 each year,
commencing September 1, 1997.
Redemption............................ The Senior Notes will not be
redeemable prior to maturity and
will not be subject to any
mandatory redemption or sinking
fund payments.
Ranking...............................
The Senior Notes are unsecured
indebtedness of Adelphia ranking
pari passu with other
unsubordinated indebtedness of
Adelphia and senior in right of
payment to any future subordinated
indebtedness of Adelphia. The
operations of Adelphia are
conducted through Adelphia's
subsidiaries and, therefore,
Adelphia is dependent on the
earnings and cash flow of and
distributions from its subsidiaries
to meet its debt obligations,
including its obligations with
respect to the Senior Notes.
Because the assets of its
subsidiaries and other investments
constitute substantially all of the
assets of Adelphia, and because
those subsidiaries and other
investments will not guarantee the
payment of principal of and
interest on the Senior Notes, the
claims of holders of the Senior
Notes effectively will be
subordinated to the claims of
creditors of such entities. As of
March 31, 1997, the Senior Notes
would have been effectively
subordinated to $1.2 billion of
indebtedness of Adelphia's
subsidiaries. As of March 31, 1997
the total indebtedness of
Adelphia's subsidiaries to banks
and institutions, on a consolidated
basis, aggregated $1.2 billion and
total trade payables as of such
date were $57 million. The
Company's ability to access the
cash flow of its subsidiaries is
subject to significant contractual
restrictions. In addition,
10
<PAGE>
Olympus has substantial leverage.
See "Risk Factors--Holding Company
Structure; Restrictive Covenants"
and "Description of Senior Notes."
Certain Covenants..................... The Indenture for the Senior Notes
(the "Indenture") contains certain
restrictions on, among other
things, the incurrence of
indebtedness, mergers and sales of
assets, a change of control, the
payment of dividends on, or the
repurchase of, capital stock of
Adelphia and certain other
restricted payments by Adelphia and
its restricted subsidiaries and
certain transactions with and
investments in affiliates. The
Indenture permits Adelphia's
subsidiaries to incur substantial
additional indebtedness.
Change of Control..................... In the event of a Change of Control
(as defined herein), the Holders of
the Senior Notes will have the
right to require the Company to
purchase their Senior Notes at a
price equal to 100% of the
aggregate principal amount thereof,
plus accrued and unpaid interest
and Liquidated Damages thereon, if
any, to the date of purchase. There
can be no assurance that the
Company will have adequate
financial resources to effect a
required repurchase of the Senior
Notes upon a Change in Control. The
Company's failure to make a
required repurchase of the Senior
Notes upon a Change in Control
would be an Event of Default under
the Indenture.
RISK FACTORS
Prospective participants in the Exchange Offer should consider all of the
information contained in this Prospectus in connection with the Exchange Offer.
In particular, prospective participants should consider the factors set forth
herein under "Risk Factors."
11
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered in evaluating the
Company and its business in connection with the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their
Old Notes will not have any registration rights under the Registration Rights
Agreement with respect to such nontendered Old Notes and, accordingly, such
Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general, the Old Notes may not be offered
or sold, unless registered under the Securities Act and applicable state
securities laws, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The
Company does not intend to register the Old Notes under the Securities Act.
Based on interpretations by the staff of the Commission with respect to
similar transactions, the Company believes that the New Notes issued pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by any holder of such New Notes (other than any such holder which
is an "affiliate" of the Registrants within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business, such holder has no
arrangement or understanding with any person to participate in the
distribution of such New Notes and neither the holder nor any other person is
engaging in or intends to engage in a distribution of the New Notes. A broker-
dealer who acquired Old Notes directly from the Registrant can not exchange
such Old Notes in the Exchange Offer. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes must acknowledge that it
will deliver a prospectus in connection with any resale of its New Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of the New Notes received in exchange for
the Old Notes acquired by the broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale for a period of 365 days after the Exchange Date or, if
earlier, until all participating broker-dealers have so resold. See "Plan of
Distribution." The New Notes may not be offered or sold unless they have been
registered or qualified for sale under applicable state securities laws or an
exemption from registration or qualification is available and is complied
with. The Registrants are required, under the Registration Rights Agreement,
to register the New Notes in any jurisdiction requested by the holders,
subject to certain limitations.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged and has incurred substantial indebtedness to
finance acquisitions and expansion of its operations and, to a lesser extent,
for investments in and advances to affiliates. At March 31, 1997, the
Company's total indebtedness aggregated approximately $2,544,039,000, which
included approximately $1,179,547,000 of subsidiary bank and institutional
debt, $189,820,000 of Hyperion debt and capital lease obligations and
approximately $1,174,672,000 of indebtedness of the Company. The Company's
total debt has varying maturities to 2007, including an aggregate of
approximately $796,891,000 maturing on or prior to March 31, 2002. The Company
has maintained its public long-term debt at the holding company level and
unrestricted subsidiaries while borrowing in the private debt markets (e.g.,
bank and insurance company debt) through the Company's wholly-owned
subsidiaries. The Company's subsidiary financings are effected through
separate borrowing groups, and substantially all of the indebtedness in these
borrowing groups is non-recourse to Adelphia. The subsidiary credit
arrangements have varied revolving credit and term loan periods and contain
separately-negotiated covenants relating to, among other things, cross-
defaults and the incurrence of additional debt for each borrowing group. In
addition, Olympus has substantial leverage. The high level of the Company's
indebtedness will have important consequences to holders of the Senior Notes,
including: (i) a substantial portion of the Company's cash flow from
operations must be dedicated to debt service and will not
12
<PAGE>
be available for general corporate purposes or for capital improvements; (ii)
the Company's ability to obtain additional debt financing in the future for
working capital, capital expenditures, acquisitions or for capital
improvements may be limited; and (iii) the Company's level of indebtedness
could limit its flexibility in reacting to changes in the industry and
economic conditions generally. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Form 10-K.
NET LOSSES AND STOCKHOLDERS' DEFICIENCY
The total stockholders' deficiency at March 31, 1996 and at March 31, 1997
was $1,128,239,000 and $1,253,881,000, respectively. The stockholders'
deficiency generally has resulted from the Company's reported net losses which
have been caused primarily by high levels of depreciation and amortization and
interest expense. The Company reported net losses of approximately
$106,284,000, $119,894,000 and $130,642,000, for the years ended March 31,
1995, 1996 and 1997, respectively. The Company expects to continue to incur
significant net losses for the next several years. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the Form 10-K.
For the year ended March 31, 1996 and March 31, 1997, the Company's earnings
were insufficient to cover its fixed charges by $78,189,000 and $61,848,000,
respectively. However, such amounts reflect non-cash charges totalling
$127,319,000 and $165,426,000, respectively, consisting of depreciation,
amortization, and non-cash interest expense on certain indebtedness of the
Company. Historically, the Company's cash generated from operating activities
and borrowings has been sufficient to meet its requirements for debt service,
working capital, capital expenditures, and investments in and advances to
affiliates and the Company has depended on the availability of additional
borrowings to meet its liquidity requirements. The Company believes that it
will continue to generate cash and obtain financing sufficient to meet such
requirements. However, the Company's ability to incur additional indebtedness
is limited by covenants in its indentures and its subsidiary credit
agreements. Adelphia expects that it will be required to refinance the Senior
Notes prior to their maturity. Although in the past the Company has been able
both to refinance its indebtedness and to obtain new financing, there can be
no assurance that the Company would be able to do so in the future or that, if
the Company were able to do so, the terms available would be favorable to the
Company. In the event that the Company were unable to refinance its
indebtedness or obtain new financing under these circumstances, the Company
would likely have to consider various options such as the sale of certain
assets to meet its required debt service, negotiation with its lenders to
restructure applicable indebtedness or other options available to it under
applicable law. There can be no assurance that any such options would yield
net proceeds sufficient to repay the Senior Notes in full. See "Selected
Consolidated Financial Data" contained herein and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Form 10-K.
HOLDING COMPANY STRUCTURE; RESTRICTIVE COVENANTS
As a holding company, Adelphia holds no significant assets other than its
investments in and advances to its subsidiaries and other investments.
Adelphia's ability to make interest and principal payments when due to holders
of debt of Adelphia is dependent upon the receipt of sufficient funds from its
subsidiaries or other investments. Under the terms of various debt agreements
between the Adelphia subsidiaries and other investments and their respective
lending institutions, upon the occurrence of an event of default (including
certain cross-defaults resulting from defaults under Adelphia's debt
agreements) or unless certain financial performance tests are met, the
Adelphia subsidiaries and other investments are restricted from distributing
funds to Adelphia. The Indenture governing the Senior Notes will not restrict
the Company's subsidiaries or other investments from contractually restricting
their ability to pay dividends to the Company in the future. In addition,
because Adelphia's subsidiaries and other investments do not guarantee the
payment of principal of and interest on debt of Adelphia, the claims of
holders of such debt effectively will be subordinated to the claim of
creditors of such entities. At March 31, 1997, the total amount of long-term
debt of such subsidiaries was $1,179,547,000. See
13
<PAGE>
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Form 10-K and "Description of Senior Notes" contained
herein.
The agreements governing the bank debt of the Company's subsidiaries (the
"Subsidiary Bank Agreements") contain, among other covenants, requirements
that Adelphia's subsidiaries maintain specified financial ratios, including
maximum leverage and minimum interest coverage. The ability of a subsidiary to
comply with such provisions may be affected by events that are beyond
Adelphia's control. The breach of any of these covenants could result in a
default by a subsidiary under its Subsidiary Bank Agreement. In the event of
any such default, lenders party to that Subsidiary Bank Agreement could elect
to declare all amounts borrowed under that Subsidiary Bank Agreement, together
with accrued interest and other fees, to be due and payable. If the
indebtedness under a Subsidiary Bank Agreement were to be accelerated, all
indebtedness outstanding under such Subsidiary Bank Agreement would be
required to be paid in full before such subsidiary would be permitted to
distribute any assets or cash to Adelphia. There can be no assurance that the
assets of Adelphia and its subsidiaries would be sufficient to repay all
borrowings under the Subsidiary Bank Agreements and indebtedness owed to the
other creditors of such subsidiaries in full. In addition, as a result of
these covenants, the ability of Adelphia's subsidiaries to respond to changing
business and economic conditions and to secure additional financing, if
needed, may be significantly restricted, and Adelphia may be prevented from
engaging in transactions that might otherwise be considered beneficial to
Adelphia.
POTENTIAL CONFLICTS OF INTEREST
The Rigas Family holds substantially all of Adelphia's Class B Common Stock
and 91.8% of the combined voting power of both classes of Adelphia's Common
Stock and has the power to elect seven of eight members of Adelphia's Board of
Directors. John J. Rigas and the other executive officers of Adelphia
(including other members of the Rigas Family) hold direct and indirect
ownership interests in the Managed Partnerships, which are managed by the
Company for a fee. Subject to the restrictions contained in the Business
Opportunity Agreement regarding future acquisitions, Rigas Family members and
the executive officers are free to continue to own these interests and acquire
additional interests in cable television systems. Such activities could
present a conflict of interest with the Company in the allocation of
management time and resources of the executive officers. In addition, there
have been and will continue to be transactions between the Company and the
executive officers or other entities in which the executive officers have
ownership interests or with which they are affiliated. The Indenture for the
Senior Notes and indentures under which the 9 7/8% Debentures, 11 7/8%
Debentures, 9 1/2% Notes, 12 1/2% Notes and 10 1/4% Notes of Adelphia were
issued contain covenants that place certain restrictions on transactions
between the Company and its affiliates. See "Certain Relationships and Related
Transactions" in the Form 10-K and "Description of Senior Notes--Covenants--
Limitation on Transactions with Affiliates."
COMPETITION
The cable television systems owned by the Company compete with other
communications and entertainment media as well as other means of video
distribution including Direct Broadcast Satellite Systems ("DBS") and
Multichannel Multipoint Distribution Systems ("MMDS"). Several companies
recently have launched or have announced their intention to launch, DBS
services that compete with the Company for multichannel video entertainment
customers. In addition, some of the Regional Bell Operating Companies (the
"RBOCs") and other local telephone companies are in the process of entering
the video-to-home business and several have expressed their intention to enter
the video-to-home business. In addition, some RBOCs and local telephone
companies have in place facilities which are capable of delivering cable
television service.
In addition, the Telecommunications Act of 1996 (the "1996 Act") has
repealed the cable/telephone cross-ownership plan, and telephone companies
will now be permitted to provide cable television service within their service
areas. Certain of such potential service providers have greater financial
resources than the Company, and in the case of local exchange carriers seeking
to provide cable service within their service areas, have an installed plant
and switching capabilities, any of which could give them competitive
advantages with respect to cable television operators such as the Company. The
Company cannot predict either the extent to which competition
14
<PAGE>
will materialize or, if such competition materializes, the extent of its
effect on the Company. See "Business--Competition" in the Form 10-K and
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" in the Form 10-K.
The Company also faces competition from other communications and
entertainment media, including conventional off-air television broadcasting
services, newspapers, movie theaters, live sporting events and home video
products. The Company cannot predict the extent to which competition may
affect the Company. See "Business--Competition" and "--Legislation and
Regulation" in the Form 10-K and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Regulatory and Competitive
Matters" in the Form 10-K.
NEED FOR ADDITIONAL FINANCING
The Company's business requires substantial investment on a continuing basis
to finance capital expenditures and related expenses for, among other things,
upgrade of the Company's cable plant (including the need to make cable system
upgrades mandated by franchise authorities), the offering of new services and
the servicing, repayment or refinancing of its indebtedness. The Company will
require significant additional financing, through debt and/or equity
issuances, to meet its capital expenditure plans and to pay its debt
obligations. There can be no assurance that Adelphia will be able to issue
additional debt or obtain additional equity capital on satisfactory terms, or
at all, to meet its future financing needs. See "Business--Technological
Developments" in the Form 10-K and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Form 10-K.
REGULATION IN THE TELECOMMUNICATIONS INDUSTRY
The cable television industry is subject to extensive regulation at the
federal, state and local levels, and many aspects of such regulation are
currently the subject of judicial proceedings and administrative or
legislative proposals. The Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act") significantly expanded the
scope of cable television regulation. In particular, pursuant to the 1992
Cable Act, the Federal Communications Commission (the "FCC") adopted
regulations that limit the Company's ability to set and increase rates for the
Company's basic and cable programming service ("CPS") packages and for the
provision of cable television-related equipment. The 1992 Cable Act permits
certified local franchising authorities to order refunds of rates paid in the
previous twelve-month period determined to be in excess of the permitted
reasonable rates. It is possible that rate reductions or refunds of previously
collected fees may be required in the future.
The 1996 Act, which became law on February 8, 1996, materially alters
federal, state and local laws and regulations pertaining to cable television,
telecommunications and other related services and, in particular,
substantially amends the Communications Act of 1934 (the "Communications
Act"). Certain provisions of the 1996 Act could materially affect the growth
and operation of the cable television industry and the cable services provided
by the Company. Although the new legislation may substantially lessen certain
regulatory burdens, the cable television industry may be subject to additional
competition as a result. See "Business--Competition." There are numerous
rulemakings that have been and continue to be undertaken by the FCC which will
interpret and implement the provisions of the 1996 Act. In addition, certain
provisions of the new legislation (such as the deregulation of rates for CPS
packages) will not immediately be effective. Furthermore, certain provisions
of the 1996 Act have been, and likely will be, subject to judicial challenge.
The Company is unable at this time to predict the outcome of such rulemakings
or litigation or the short and long-term effect (financial or otherwise) of
the 1996 Act and FCC rulemakings on the Company.
The cable television industry is subject to state and local regulations and
the Company must comply with rules of the local franchising authorities to
retain and renew its cable franchises, among other matters. There can be no
assurances that the franchising authorities will not impose new and more
restrictive requirements as a condition to franchise renewal.
15
<PAGE>
Although the 1996 Act eliminates many legal barriers to entry (i.e.,
telephone companies entering the cable industry and cable companies entering
the telephone industry), the Company cannot assure that rules adopted by the
FCC or state regulators or other legislative or judicial initiatives relating
to the telecommunications industry will not have a material adverse effect on
the Company. In addition, the 1996 Act removes entry barriers for all
companies and could increase substantially the number of competitors offering
comparable services in the Company's potential markets. See "Legislation and
Regulation" in the Form 10-K and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Regulatory and Competitive
Matters" in the Form 10-K.
ABSENCE OF A PUBLIC MARKET FOR THE NOTES; POSSIBLE VOLATILITY OF NOTE PRICE
Prior to the Exchange Offer, there has been no public market for the Old
Notes. The Company does not intend to apply for listing of the Senior Notes on
any securities exchange or for inclusion of the Senior Notes in any automated
quotation system, but the Initial Purchaser has applied to the National
Association of Securities Dealers, Inc. to have the Senior Notes designated as
a PORTAL security. Although the Company has been advised by the Initial
Purchaser that it currently intends to make a market in the Senior Notes, it
is not obligated to do so and any such market making activities may be
discontinued at any time without notice. Accordingly, there can be no
assurance as to the development or liquidity of any market for the Senior
Notes. If a market for the Senior Notes were to develop, the Senior Notes
could trade at prices that may be higher or lower than their initial offering
price depending upon many factors, including prevailing interest rates, the
Company's operating results and the markets for similar securities.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of
securities similar to the Senior Notes. There can be no assurance that, if a
market for the Senior Notes were to develop, such a market would not be
subject to similar disruptions.
16
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On February 26, 1997, the Registrant issued $350,000,000 aggregate principal
amount of Old Notes to Smith Barney Inc., the Initial Purchaser. The issuance
was not registered under the Securities Act in reliance upon the exemption
under Rule 144A, Section 4(2) and Regulation S of the Securities Act. In
connection with the issuance and sale of the Old Notes, the Registrant entered
into a Registration Rights Agreement with the Initial Purchaser dated as of
February 26, 1997 (the "Registration Rights Agreement"), which requires the
Registrant to cause the Old Notes to be registered under the Securities Act or
to file with the Commission a registration statement under the Securities Act
with respect to an issue of new notes of the Registrant identical in all
material respects to the Old Notes, and use its best efforts to cause such
registration statement to become effective under the Securities Act and, upon
the effectiveness of that registration statement, to offer to the holders of
the Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes, which will be issued without a restrictive legend and may
be reoffered and resold by the holder without restrictions or limitations
under the Securities Act. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is
a part. The Exchange Offer is being made pursuant to the Registration Rights
Agreement to satisfy the Registrant's obligations thereunder.
Based on no-action letters issued by the staff of the Commission to third
parties, the Registrant believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any holder of such New Notes (other than any such
holder which is an "affiliate" of the Registrant within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holder's business, such
holder has no arrangement or understanding with any person to participate in
the distribution of such New Notes and neither the holder nor any other person
is engaging in or intends to engage in a distribution of the New Notes. A
broker-dealer who acquired Old Notes directly from the Registrant can not
exchange such Old Notes in the Exchange Offer. Any holder who tenders in the
Exchange Offer for the purpose of participating in a distribution of the New
Notes cannot rely on such interpretation by the staff of the Commission and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Registrants will accept any and all Old Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the
Expiration Date (as defined herein). The Registrant will issue a principal
amount of New Notes in exchange for an equal principal amount of outstanding
Old Notes tendered and accepted in the Exchange Offer. Holders may tender some
or all of their Old Notes pursuant to the Exchange Offer. The date of
acceptance for exchange of the Old Notes for the New Notes (the "Exchange
Date") will be the first business day following the Expiration Date.
The terms of the New Notes and the Old Notes are substantially identical in
all material respects, except for certain transfer restrictions, registration
rights and Liquidated Damages for Registration Defaults relating to the Old
Notes which will not apply to the New Notes. See "Description of Senior
Notes." The New Notes will evidence the same debt as the Old Notes. The New
Notes will be issued under and entitled to the benefits of the Indenture
pursuant to which the Old Notes were issued.
As of the date of this Prospectus, $350,000,000 aggregate principal amount
of the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders.
17
<PAGE>
Holders of Old Notes do not have any appraisal or dissenters' rights under
state law or the Indenture in connection with the Exchange Offer. The
Registrant intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable
requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder. Old Notes which are not tendered and were not
prohibited from being tendered for exchange in the Exchange Offer will remain
outstanding and continue to accrue interest and to be subject to transfer
restrictions, but will not be entitled to any rights or benefits under the
Registration Rights Agreement.
Upon satisfaction or waiver of all the conditions to the Exchange Offer, on
the Exchange Date the Registrant will accept all Old Notes properly tendered
and not withdrawn and will issue New Notes in exchange therefor. For purposes
of the Exchange Offer, the Registrant shall be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Registrant had
given oral or written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering holders for the purposes of receiving the
New Notes from the Registrant.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly
executed Letter of Transmittal and all other required documents; provided,
however, that the Registrant reserves the absolute right to waive any defects
or irregularities in the tender or conditions of the Exchange Offer. If any
tendered Old Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Old Notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or
nonexchanged Old Notes or substitute Old Notes evidencing the unaccepted
portion, as appropriate, will be returned without expense to the tendering
holder thereof as promptly as practicable after the expiration or termination
of the Exchange Offer.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Registrant will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date," shall mean 5:00 p.m., New York City time, on
, 1997, unless the Registrant, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended; provided that the
Exchange Offer shall not be extended beyond 30 business days after the date of
this Prospectus.
In order to extend the Expiration Date, the Registrant will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, prior to 9:00 a.m., New York City
time, on the next business day after the then Expiration Date.
The Registrant reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written
notice thereof. If the Exchange Offer is amended in a manner determined by the
Registrant to constitute a material change, the Registrant will promptly
disclose such amendment in a manner reasonably calculated to inform the
holders of Old Notes of such amendment.
Without limiting the manner in which the Registrant may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Registrant shall have no obligation to
18
<PAGE>
publish, advertise, or otherwise communicate any such public announcement,
other than by making a timely release to an appropriate news agency.
INTEREST ON THE NEW NOTES
New Notes will bear interest at the rate of 9 7/8% per annum, payable semi-
annually, in cash, on March 1 and September 1 of each year, commencing
September 1, 1997.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Registrant will
not be required to exchange any New Notes for any Old Notes, and may terminate
or amend the Exchange Offer before the acceptance of any Old Notes for
exchange, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer
which seeks to restrain or prohibit the Exchange Offer or, in the
Registrant's judgment, would materially impair the ability of the
Registrant to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule, order or regulation is interpreted,
by any government or governmental authority which, in the Registrant's
judgment, would materially impair the ability of the Registrant to
proceed with the Exchange Offer; or
(c) the Exchange Offer or the consummation thereof would otherwise violate
or be prohibited by applicable law.
If the Registrant determines in its sole discretion that any of these
conditions is not satisfied, the Registrant may (i) refuse to accept any Old
Notes and return all tendered Old Notes to the tendering holders, (ii) extend
the Exchange Offer and retain all Old Notes tendered prior to the expiration
of the Exchange Offer, subject, however, to the rights of holders who tendered
such Old Notes to withdraw their tendered Old Notes, or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Registrant will
promptly disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and the Registrant will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the registered
holders, if the Exchange Offer would otherwise expire during such five to ten
business day period.
The foregoing conditions are for the sole benefit of the Registrant and may
be asserted by the Registrant regardless of the circumstances giving rise to
any such condition or may be waived by the Registrant in whole or in part at
any time and from time to time in their sole discretion. The failure by the
Registrant at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination by the Registrant concerning the events described above shall be
final and binding on all parties.
PROCEDURES FOR TENDERING
The tender of Old Notes by a holder as set forth below and the acceptance
thereof by the Registrant will constitute an agreement between such holder and
the Registrant in accordance with the terms and subject to the conditions set
forth in this Prospectus and in the Letter of Transmittal.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must (i) complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the
19
<PAGE>
signatures thereon guaranteed if required by the Letter of Transmittal, and
mail or otherwise deliver such Letter of Transmittal or such facsimile,
together with the Old Notes (unless such tender is being effected pursuant to
the procedure for book-entry transfer described below) and any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on
the Expiration Date, or (ii) comply with the guaranteed delivery procedures
described below. Delivery of all documents must be made to the Exchange Agent
at its address set forth herein.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE REGISTRANTS.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering of
such owner's Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership
may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by any Eligible Institution (as defined) unless the
Old Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Payment Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter
of Transmittal or a notice of withdrawal, as the case may be, are required to
be guaranteed, such guarantee must be by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes, with the
signature thereon guaranteed by an Eligible Institution. If the Letter of
Transmittal or any Old Notes or bond powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and unless waived by the Registrant, evidence
satisfactory to the Registrant of their authority to so act must be submitted
with the Letter of Transmittal.
Any financial institution that is a participant in the book-entry transfer
facility for the Old Notes, the Depository Trust Company ("DTC"), may make
book-entry delivery of Old Notes by causing DTC to transfer such Old Notes
into the Exchange Agent's account with respect to the Old Notes in accordance
with DTC's procedures for such transfer. Although delivery of Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
an appropriate Letter of Transmittal with any required signature guarantee and
all other required documents must in each case be, or be deemed to be,
transmitted to and received and confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures.
20
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Registrant in its sole discretion, which
determination will be final and binding. The Registrant reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Registrant's acceptance of which would, in the opinion of counsel for the
Registrant, be unlawful. The Registrant also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Old Notes.
The Registrant's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in the Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Registrant shall determine. Although the Registrant intends to notify holders
of defects or irregularities with respect to tenders of Old Notes, neither the
Registrant, the Exchange Agent nor any other person shall incur any liability
for failure to give such notification. Tenders of Old Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, the Registrant reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date or, as set forth below under "Conditions," to terminate
the Exchange Offer and, to the extent permitted by applicable law, purchase
Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering, each holder will also represent to the Registrant (i) that the
New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is the holder, (ii) that neither the holder nor any such
person has an arrangement or understanding with any person to participate in
the distribution of such New Notes and (iii) that neither the holder nor any
such other person is an "affiliate," as defined in Rule 405 under the
Securities Act, of the Registrant, or that if it is an "affiliate," it will
comply with the registration and prospective delivery requirements of the
Securities Act to the extent applicable.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, or (iii) who cannot complete the procedures for book-entry
transfer of Old Notes to the Exchange Agent's account with DTC prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) On or prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice
of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the holder, the
certificate number(s) of such Old Notes (if possible) and the principal
amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within five business trading days after
the Expiration Date, (i) the Letter of Transmittal (or facsimile
thereof) together with the certificate(s) representing the Old Notes
and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, or (ii)
that book-entry transfer of such Old Notes into the Exchange Agent's
account at DTC will be effected and confirmation of such book-entry
transfer will be delivered to the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all
tendered Old Notes in proper form for transfer and all other documents
required by the Letter of Transmittal, or confirmation of book-entry
transfer of the Old Notes into the
21
<PAGE>
Exchange Agent's account at DTC, are received by the Exchange Agent
within five business trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer:
The holder tendering Old Notes exchanges, assigns and transfers the Old
Notes to the Registrant and irrevocably constitutes and appoints the Exchange
Agent as the holder's agent and attorney-in-fact to cause the Old Notes to be
assigned, transferred and exchanged. The holder represents and warrants to the
Registrant and the Exchange Agent that (i) it has full power and authority to
tender, exchange, assign and transfer the Old Notes and to acquire the New
Notes in exchange for the Old Notes, (ii) when the Old Notes are accepted for
exchange, the Registrant will acquire good and unencumbered title to the Old
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, (iii) it will, upon request, execute and
deliver any additional documents deemed by the Registrant to be necessary or
desirable to complete the exchange, assignment and transfer of tendered Old
Notes and (iv) acceptance of any tendered Old Notes by the Registrant and the
issuance of New Notes in exchange therefor will constitute performance in full
by the Registrant of its obligations under the Registration Rights Agreement
and the Registrant will have no further obligations or liabilities thereunder
to such holders (except with respect to accrued and unpaid Liquidated Damages,
if any). All authority conferred by the holder will survive the death or
incapacity of the holder and every obligation of the holder will be binding
upon the heirs, legal representatives, successors, assigns, executors and
administrators of the holder.
Each holder will also certify that it (i) is not an "affiliate" of the
Registrant within the meaning of Rule 405 under the Securities Act or that, if
it is an "affiliate," it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (ii) is
acquiring the New Notes in the ordinary course of its business and (iii) has
no arrangement with any person or intent to participate in, and is not
participating in, the distribution of the New Notes.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
facsimile transmission or letter indicating notice of withdrawal must be
received by the Exchange Agent at its address set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. Any such notice of
withdrawal must (i) specify the name of the person having tendered the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such Old Notes), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer, any
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawn Old Notes or otherwise comply with DTC's
procedures. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Registrant, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no New Notes will be issued with respect
22
<PAGE>
thereto unless the Old Notes so withdrawn are validly retendered. Any Old
Notes which have been tendered but which are not accepted for payment will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following
one of the procedures described above under "Procedures for Tendering" at any
time prior to the Expiration Date.
UNTENDERED OLD NOTES
Holders of Old Notes whose Old Notes are not tendered or are tendered but
not accepted in the Exchange Offer will continue to hold such Old Notes and
will be entitled to all the rights and preferences and subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the holders of Old Notes will continue to be subject to
the existing restrictions upon transfer thereof and the Registrant will have
no further obligations to such holders, other than the Initial Purchaser, to
provide for the registration under the Securities Act of the Old Notes held by
them. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
could be adversely affected.
EXCHANGE AGENT
Bank of Montreal Trust Company, the Trustee under the Indenture, has been
appointed as Exchange Agent of the Exchange Offer. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
By Registered or Certified Mail, By Facsimile:
by hand or by Overnight Courier Bank of Montreal Trust Company
Bank of Montreal Trust Company Attention: Corporate Trust Department
77 Water Street (212) 701-7684
New York, NY 10005 Confirm by Telephone:
Attention: Corporate Trust Department (212) 701-7653
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Registrant. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers, regular
employees or agents of the Registrant and its affiliates.
The Registrant has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Registrant, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith
and will pay the reasonable fees and expenses of holders in delivering their
Old Notes to the Exchange Agent.
The cash expenses of the Registrant to be incurred in connection with the
Registrant's performance and completion of the Exchange Offer will be paid by
the Registrant. Such expenses include fees and expenses of the Exchange Agent
and Trustee, accounting and legal fees and printing costs, among others.
The Registrant will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however,
certificates representing New Notes or Old Notes for principal amounts not
23
<PAGE>
tendered or accepted for exchange are to be delivered to, or are to be issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax
is imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Upon consummation of the Exchange Offer, holders of Old Notes that were not
prohibited from participating in the Exchange Offer and did not tender their
Old Notes will not have any registration rights under the Registration Rights
Agreement with respect to such nontendered Old Notes and, accordingly, such
Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. In general, the Old Notes may not be offered
or sold, unless registered under the Securities Act and applicable state
securities laws, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The
Registrant does not intend to register the Old Notes under the Securities Act.
Based on interpretations by the staff of the Commission with respect to
similar transactions, the Registrant believes that the New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any holder of such New Notes
(other than any such holder which is an "affiliate" of the Registrant within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business, such holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes and neither the
holder nor any other person is engaging in or intends to engage in a
distribution of the New Notes. If any holder has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, the holder (i) could not rely on the
applicable interpretations of the staff of the Commission and (ii) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. Each broker-dealer that
receives New Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
its New Notes. See "Plan of Distribution." The New Notes may not be offered or
sold unless they have been registered or qualified for sale under applicable
state securities laws or an exemption from registration or qualification is
available and is complied with. The Registrant is required, under the
Registration Rights Agreement, to register the New Notes in any jurisdiction
requested by the holders, subject to certain limitations.
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Old Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
Upon consummation of the Exchange Offer, holders of the Old Notes that were
not prohibited from participating in the Exchange Offer and did not tender
their Old Notes will not have any registration rights under the Registration
Rights Agreement with respect to such nontendered Old Notes and, accordingly,
such Old Notes will continue to be subject to the restrictions on transfer
contained in the legend thereon. However, in the event the Company fails to
consummate the Exchange Offer or a holder of Old Notes notifies the Company in
accordance with the Registration Rights Agreement that it will be unable to
participate in the Exchange Offer due to circumstances delineated in the
Registration Rights Agreement, then the holder of the Old Notes will have
certain rights to have such Old Notes registered under the Securities Act
pursuant to the Registration Rights Agreement and subject to conditions
contained therein.
The Registrant has not entered into any arrangement or understanding with
any person to distribute the New Notes to be received in the Exchange Offer,
and to the best of the Registrant's information and belief, each
24
<PAGE>
person participating in the Exchange Offer is acquiring the New Notes in its
ordinary course of business and has no arrangement or understanding with any
person to participate in the distribution of the New Notes to be received in
the Exchange Offer. In this regard, the Registrant will make each person
participating in the Exchange Offer aware (through this Prospectus or
otherwise) that if the Exchange Offer is being registered for the purpose of
secondary resale, any holder using the Exchange Offer to participate in a
distribution of New Notes to be acquired in the registered Exchange Offer (i)
may not rely on the staff position enunciated in Morgan Stanley and Co. Inc.
(avail. June 5, 1991) and Exxon Capital Holding Corp. (avail. May 13, 1988) or
similar letters and (ii) must comply with registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes
as reflected in the Registrant's accounting records on the Exchange Date.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Registrant. The expenses of the Exchange Offer will be expensed over the term
of the New Notes.
USE OF PROCEEDS
The net proceeds of the Offering, after deducting offering expenses, were
approximately $340,000,000. Of this amount approximately $209,000,000 was
contributed to Adelphia subsidiaries and used to repay revolving credit
facilities of such subsidiaries, all of which may be reborrowed and used for
general corporate purposes of such subsidiaries and $131,000,000 was used by
Adelphia to purchase, redeem or otherwise retire a portion of the 12 1/2%
Senior Notes due 2002 of Adelphia. As of December 31, 1996, the effective
interest rates charged on subsidiary credit facilities ranged from 6.50% to
11.85%.
Adelphia will not receive any proceeds from the Exchange Offer.
25
<PAGE>
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table sets forth the capitalization of the Company as of March
31, 1997, on an actual and as- adjusted basis to reflect the sale of $150,000
of 10 1/2% Senior Notes (the "Notes") and $150,000 of 13% Series A Cumulative
Exchangeable Preferred Stock (the "Exchangeable Preferred Stock") offered in
July 1997 and the concurrent sale of the Convertible Preferred Stock. This
table should be read in conjunction with Adelphia's consolidated financial
statements and related notes thereto included in the Form 10-K.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------
ACTUAL AS ADJUSTED (B)
----------- ---------------
<S> <C> <C>
Long-term debt including current maturities (a):
Notes of Subsidiaries to banks.................. $ 813,200 $ 714,700
Notes of Subsidiaries to institutions........... 346,300 62,300
Other Debt...................................... 20,047 20,047
----------- -----------
Total Subsidiary Bank and Institutional Debt... 1,179,547 797,047
----------- -----------
13% Senior Discount Notes of Hyperion due 2003.. 187,173 187,173
Other Hyperion Debt............................. 2,647 2,647
----------- -----------
Total Hyperion Debt............................ 189,820 189,820
----------- -----------
Total Subsidiaries' Debt...................... 1,369,367 986,867
----------- -----------
10 1/2% Senior Notes due 2004................... -- 150,000
9 7/8% Senior Notes due 2007.................... 347,274 347,274
12 1/2% Senior Notes due 2002................... 277,385 277,385
10 1/4% Senior Notes due 2000................... 99,322 99,322
11 7/8% Senior Debentures due 2004.............. 124,539 124,539
9 7/8% Senior Debentures due 2005............... 128,255 128,255
9 1/2% Senior Pay-In-Kind Notes due 2004........ 197,897 197,897
----------- -----------
Total Parent Debt............................... 1,174,672 1,324,672
----------- -----------
Total long-term debt including current
maturities................................... 2,544,039 2,311,539
----------- -----------
Series A cumulative exchangeable preferred stock,
$.01 par value, 1,500,000 shares authorized and
1,500,000 shares outstanding, as adjusted
(aggregate liquidation preference $150,000)...... -- 147,750
Series B cumulative exchangeable preferred stock,
$.01 par value, 1,500,000 shares authorized and
none outstanding................................. -- --
Stockholders' equity (deficiency):
Series C cumulative convertible preferred stock,
$.01 par value, 100,000 shares authorized and
100,000 shares outstanding, as adjusted; each
share of preferred stock convertible into
117.9245 shares of Class A Common Stock at the
option of the holder (aggregate liquidation
preference $100,000)........................... -- 97,000
Class A Common Stock, $.01 par value,
200,000,000 shares authorized and 16,130,880
shares outstanding............................. 161 161
Class B Common Stock, $.01 par value, 25,000,000
shares authorized and 10,944,476 shares
outstanding.................................... 109 109
Additional paid-in capital...................... 219,408 219,408
Accumulated deficit............................. (1,473,559) (1,484,559)
----------- -----------
Total stockholders' equity (deficiency)....... (1,253,881) (1,167,881)
----------- -----------
Total capitalization......................... $ 1,290,158 $ 1,291,408
=========== ===========
</TABLE>
- --------
(a) Reference is made to Note 3 to Adelphia's consolidated financial
statements in the Form 10-K, for a description of Notes of Subsidiaries to
Banks and Institutions. See "The Company--Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" in the Form 10-K .
(b) Gives effect to the application of the net proceeds of approximately
$393,500 from the Offerings of the Notes and the Exchangeable Preferred
Stock and the sale of the Convertible Preferred Stock to the repayment of
Notes of Subsidiaries to institutions of $284,000 plus a premium of
approximately $11,000 and the repayment of Notes of Subsidiaries to Banks
of approximately $98,500.
26
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA (DOLLARS IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
The selected consolidated financial data as of and for each of the five
years in the period ended March 31, 1997 have been derived from the audited
consolidated financial statements of the Company. These data should be read in
conjunction with the consolidated financial statements and related notes
thereto for each of the three years in the period ended March 31, 1997 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Form 10-K which is incorporated herein by
reference. The statement of operations data with respect to fiscal years ended
March 31, 1993 and 1994, and the balance sheet data at March 31, 1993, 1994
and 1995, have been derived from audited consolidated financial statements of
the Company not included in the Form 10-K. The statements of operations and
balance sheet data as of and for each of the four years ended March 31, 1997
of Hyperion have been derived from audited consolidated financial statements
of Hyperion not included in the Form 10-K. The unaudited information of
Hyperion for the fiscal year ended March 31, 1993 is derived from other
Hyperion information.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues................ $ 305,222 $ 319,045 $ 361,505 $ 403,597 $ 472,778
Direct Operating and
Programming Expenses... 82,377 90,547 106,993 124,116 148,982
Selling, General and
Administrative
Expenses............... 49,468 52,801 63,487 68,357 81,763
Depreciation and
Amortization........... 90,406 89,402 97,602 111,031 124,066
Rate Regulation Charge.. -- -- -- 5,300 --
--------- --------- --------- --------- ---------
Operating Income ....... 82,971 86,295 93,423 94,793 117,967
Interest Income from
Affiliates............. 5,216 9,188 11,112 10,623 8,367
Other Income (Expense).. 1,447 (299) 1,453 -- --
Priority Investment In-
come from Olympus...... 22,300 22,300 22,300 28,852 42,086
Cash Interest Expense... (164,695) (180,456) (180,942) (194,403) (199,332)
Noncash Interest
Expense................ (164) (1,680) (14,756) (16,288) (41,360)
Equity in Loss of Joint
Ventures............... (46,841) (30,054) (44,349) (46,257) (59,169)
Gain on Sale of
Investments............ -- -- -- -- 12,151
--------- --------- --------- --------- ---------
Loss before Income
Taxes, Extraordinary
Loss and Cumulative
Effect of Change in
Accounting Principle
(a).................... (99,766) (94,706) (111,759) (122,680) (119,290)
Income Tax (Expense)
Benefit................ (3,143) (2,742) 5,475 2,786 358
--------- --------- --------- --------- ---------
Loss before
Extraordinary Loss and
Cumulative Effect of
Change in Accounting
Principle.............. (102,909) (97,448) (106,284) (119,894) (118,932)
Extraordinary Loss on
Early Retirement of
Debt................... (14,386) (752) -- -- (11,710)
Cumulative Effect of
Change in
Accounting for Income
Taxes (a).............. (59,500) (89,660) -- -- --
--------- --------- --------- --------- ---------
Net Loss................ $(176,795) $(187,860) $(106,284) $(119,894) $(130,642)
========= ========= ========= ========= =========
Ratio of Earnings
Available to Cover
Fixed
Charges (f)............ -- -- -- -- --
Loss per weighted
average share of common
stock before
extraordinary loss and
cumulative effect of
change in accounting
principle ............. $ (6.80) $ (5.66) $ (4.32) $ (4.56) $ (4.50)
Net loss per weighted
average share of common
stock ................. (11.68) (10.91) (4.32) (4.56) (4.94)
Cash dividends declared
per common share ...... -- -- -- -- --
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
MARCH 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Adelphia excluding Hype-
rion
Total Assets........... $ 945,277 $1,059,081 $1,232,136 $1,332,310 $1,469,225
Total Debt............. 1,726,285 1,773,743 1,986,069 2,124,618 2,328,364
Hyperion
Total Assets........... 4,316 14,765 23,212 35,269 174,601
Total Debt............. 4,814 19,968 35,541 50,855 215,675
Adelphia
Total Assets........... 949,593 1,073,846 1,255,348 1,367,579 1,643,826
Total Debt............. 1,731,099 1,793,711 2,021,610 2,175,473 2,544,039
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OTHER DATA AND FINANCIAL
RATIOS:
Adelphia excluding Hype-
rion
Revenues................ $ 305,133 $ 318,628 $ 359,776 $ 400,275 $ 467,690
Affiliate interest and
priority investment in-
come................... 27,516 31,488 33,412 39,475 50,453
EBITDA (b).............. 203,191 209,894 228,067 250,451 297,610
Interest expense........ (164,859) (179,972) (192,377) (204,603) (212,315)
Capital expenditures.... 69,025 72,797 89,232 94,005 93,482
Total debt to EBITDA
(c).................... 8.34 8.46 8.51 8.29 7.64
EBITDA to total interest
expense (e)............ 1.23 1.17 1.19 1.22 1.40
EBITDA margin (d)....... 66.6% 65.9% 63.4% 62.6% 63.6%
Hyperion
Revenues................ $ 89 $ 417 $ 1,729 $ 3,322 $ 5,088
Affiliate interest and
priority investment in-
come................... -- -- -- -- --
EBITDA (b).............. (851) (1,958) (2,177) (2,452) (5,124)
Interest expense........ -- (2,164) (3,321) (6,088) (28,377)
Capital expenditures.... 1,950 3,097 2,850 6,084 36,127
Total debt to EBITDA
(c).................... (2.88) (11.09) (9.09) (25.63) (32.68)
EBITDA to total interest
expense (e)............ -- (.90) (.66) (.40) (0.18)
EBITDA margin (d)....... (956.2%) (469.5%) (125.9%) (73.8%) (100.7%)
Adelphia
Revenues................ $ 305,222 $ 319,045 $ 361,505 $ 403,597 $ 472,778
Affiliate interest and
priority investment in-
come................... 27,516 31,488 33,412 39,475 50,453
EBITDA (b).............. 202,340 207,936 225,890 247,999 292,486
Interest expense........ (164,859) (182,136) (195,698) (210,691) (240,692)
Capital expenditures.... 70,975 75,894 92,082 100,089 129,609
Cash provided by operat-
ing activities......... 1,275 26,952 48,936 64,287 34,794
Cash used for investing
activities............. (163,425) (197,088) (247,275) (189,462) (322,047)
Cash provided by financ-
ing activities......... 189,648 205,540 129,309 130,939 337,983
Total debt to EBITDA
(c).................... 8.41 8.53 8.65 8.35 8.53
EBITDA to total interest
expense (e)............ 1.23 1.14 1.15 1.18 1.22
EBITDA margin (d)....... 66.3% 65.2% 62.5% 61.4% 61.9%
</TABLE>
(a) "Cumulative Effect of Change in Accounting Principle" refers to a change
in accounting principle for Olympus and the Company. Effective January 1,
1993 and April 1, 1993, respectively, Olympus and the Company adopted the
provisions of Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," which requires an asset and liability
approach for financial accounting and reporting for income taxes. The
adoption of SFAS No. 109 resulted in the cumulative recognition of an
additional liability by Olympus and the Company of $59,500 and $89,660,
respectively.
(b) Earnings before interest expense, income taxes, depreciation and
amortization, equity in net loss of joint ventures, other noncash charges,
extraordinary loss and cumulative effect of change in accounting principle
("EBITDA"). EBITDA includes affiliate interest and priority investment
income on the Company's investment in Olympus, although there can be no
assurance that such priority investment income will be available to the
Company in the future. EBITDA and similar measurements of cash flow are
commonly used in the cable television industry to analyze and compare
cable television companies on the basis of operating performance, leverage
and liquidity. While EBITDA is not an alternative indicator of operating
performance to operating income or an alternative to cash flows from
operating activities as a measure of liquidity as defined by generally
accepted accounting principles, and, while EBITDA may not be comparable to
other
28
<PAGE>
similarly titled measures of other companies, the Company's management
believes EBITDA is a meaningful measure of performance as substantially all
of the Company's financing agreements contain financial covenants based on
EBITDA.
(c) Based on total debt outstanding at the end of the period, divided by
annualized EBITDA for the quarter ending the period presented, the Company
believes that this presentation is consistent with the covenant test which
limits the incurrance of indebtedness in the Indenture for the Notes as
described in "Description of the Notes" and that this ratio is commonly
used for the cable television industry as a measure of leverage.
(d) Percentage represents EBITDA divided by revenues.
(e) Based on EBITDA for the period presented divided by interest expense
recorded for the applicable period.
(f) For purposes of calculating the ratio of earnings available to cover fixed
charges: (i) earnings consist of loss before income taxes and
extraordinary items plus fixed charges excluding capitalized interest and
(ii) fixed charges consist of interest, whether expensed or capitalized
plus amortization of debt issuance costs plus the assumed interest
component of rent expense. For the years ended March 31, 1993, 1994, 1995,
1996 and 1997, the Company's earnings were insufficient to cover its fixed
charges by $53,934, $65,997, $69,146, $78,189 and $61,848, respectively.
29
<PAGE>
DESCRIPTION OF SENIOR NOTES
GENERAL
The New Notes, like the Old Notes, will be issued pursuant to the Indenture,
dated February 26, 1997 (the "Indenture"), among the Company and Bank of
Montreal Trust Company, as trustee (the "Trustee"). The terms of the Senior
Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (the "Trust
Indenture Act"). The terms of the New Notes are substantially identical to the
Old Notes in all material respects (including interest rate and maturity),
except that (i) the New Notes will not be subject to the restrictions on
transfer (other than with respect to holders that are broker-dealers, persons
who participated in the distribution of the Old Notes or affiliates) and (ii)
the Registration Rights Agreement covenants regarding registration and the
related Liquidated Damages (other than those that have accrued and were not
paid) with respect to Registration Defaults will have been deemed satisfied.
The Senior Notes are subject to all such terms, and holders of Senior Notes
are referred to the Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Indenture does not
purport to be complete and is qualified by reference to the Indenture,
including the definitions therein of certain terms used below. A copy of the
Indenture and Registration Rights Agreement is available as set forth under
"Available Information." The definitions of certain terms used in the
following summary are set forth below under "--Certain Definitions." As used
in this section, the term "Company" refers only to Adelphia Communications
Corporation and not to its subsidiaries.
As of the date of this Prospectus, $350,000,000 principal amount of the Old
Notes was outstanding.
The Indenture authorizes the issuance of up to $600,000,000 in aggregate
principal amount of the Senior Notes. The Senior Notes are general senior
unsecured obligations of Adelphia and are effectively subordinate in right of
payment to the liabilities of Adelphia's subsidiaries. See "Subordination to
Subsidiary Debt" and "Certain Definitions" below.
The Senior Notes will mature on March 1, 2007. Adelphia will pay interest on
the Senior Notes on March 1 and September 1 of each year, commencing September
1, 1997, to the persons who are registered holders at the close of business on
the February 15 and August 15 immediately preceding the interest payment date.
The Senior Notes will not be redeemable prior to the maturity date.
The Indenture and the existing indentures under which the 12 1/2% Senior
Notes due 2002 (the "12 1/2% Notes"), the 10 1/4% Senior Notes due 2000 (the
"10 1/4% Notes"), the 9 1/2% Senior Pay-In-Kind Notes due 2004 (the "9 1/2%
Notes"), the 11 7/8% Senior Debentures due 2004 (the "11 7/8% Debentures") and
the 9 7/8% Senior Debentures due 2005 (the "9 7/8% Debentures") of Adelphia
were issued contain covenants which may afford holders of Senior Notes, the 12
1/2% Notes, the 10 1/4% Notes, the 9 1/2% Notes, the 11 7/8% Debentures and
the 9 7/8% Debentures certain protections regarding leverage and the
incurrence of indebtedness. These include covenants which limit the amount of
additional indebtedness that may be incurred by Adelphia and its subsidiaries,
which restrict mergers and consolidations by Adelphia unless after giving
effect to the transaction the consolidated fixed charge ratio of the surviving
entity satisfies certain compliance tests, and which require such Senior
Notes, the 12 1/2% Notes, the 10 1/4% Notes, the 9 1/2% Notes, 11 7/8%
Debentures and 9 7/8% Debentures to be secured equally and ratably with other
indebtedness in certain circumstances where Adelphia creates or assumes liens
on its property or assets in connection therewith. See "Covenants" below.
On the date of the Indenture, the only Unrestricted Subsidiaries of Adelphia
are Hyperion and Global Cablevision, Inc.
The Senior Notes are not redeemable and there is no mandatory redemption or
sinking fund prior to maturity.
30
<PAGE>
RANKING
The New Notes will be senior unsecured indebtedness of Adelphia, will rank
pari passu in right of payment with other unsubordinated indebtedness of
Adelphia and senior in right of payment to all future subordinated
indebtedness of Adelphia. The operations of Adelphia are conducted through its
subsidiaries and, therefore, Adelphia is dependent on the earnings and cash
flow of and distributions from its subsidiaries to meet its debt obligations,
including its obligations with respect to the New Notes. Because the assets of
its subsidiaries constitute substantially all of the assets of Adelphia, and
because the subsidiaries will not guarantee the payment of principal of and
interest on the New Notes, the claims of holders of the New Notes effectively
will be subordinated to the claims of creditors of such entities. As of March
31, 1997, the New Notes would have been effectively subordinated to $1.2
billion of indebtedness of Adelphia's subsidiaries. As of March 31, 1997, the
total indebtedness of Adelphia's subsidiaries to banks and institutions, on a
consolidated basis, aggregated $1.2 billion. See "Risk Factors--Holding
Company Structure; Restrictive Covenants."
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Adelphia and the Initial Purchaser entered into the Registration Rights
Agreement on February 26, 1997 (the "Closing Date"). Pursuant to the
Registration Rights Agreement, Adelphia agreed to use its reasonable efforts
to file with the Commission on or prior to 90 days after the Closing Date the
Exchange Offer Registration Statement on the appropriate form under the
Securities Act with respect to the Exchange Notes. Upon the effectiveness of
the Exchange Offer Registration Statement, Adelphia will offer to the Holders
of Transfer Restricted Securities pursuant to the Exchange Offer who are able
to make certain representations the opportunity to exchange their Transfer
Restricted Securities for New Notes. If (i) Adelphia is not required to file
the Exchange Offer Registration Statement or permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law
or Commission policy or (ii) any Holder of Transfer Restricted Securities
notifies Adelphia on or prior to the 20th Business Day following consummation
of the Exchange Offer that it (a) is prohibited by law or Commission policy
from participating in the Exchange Offer or (b) may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (iii) any Holder
of Transfer Restricted Securities is a broker-dealer and holds Senior Notes
acquired directly from Adelphia or an affiliate of Adelphia, and shall so
notify Adelphia, Adelphia will file with the Commission a Shelf Registration
Statement to cover resales of the Senior Notes by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. Adelphia will use its best
efforts to cause the applicable registration statement to be declared
effective by the Commission within the applicable time period. For purposes of
the foregoing, "Transfer Restricted Securities" means each Old Note until (i)
the date on which such Old Note has been exchanged by a person other than a
broker-dealer for a New Note in the Exchange Offer, (ii) following the
exchange by a broker dealer in the Exchange Offer of a Note for a New Note,
the date on which such New Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on
which such New Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iv)
the date on which such Senior Note is distributed to the public pursuant to
Rule 144 under the Securities Act. Notwithstanding the foregoing, at any time
after Consummation (as defined in the Registration Rights Agreement) of the
Exchange Offer, Adelphia may allow the Shelf Registration Statement to cease
to be effective and usable if (i) the Board of Directors of Adelphia
determines in good faith that such action is in the best interests of
Adelphia, and Adelphia notifies the Holders within a certain period of time
after the Board of Directors of Adelphia makes such determination or (ii) the
prospectus contained in the Shelf Registration Statement contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that the period referred to in
the Registration Rights Agreement during which the Shelf Registration
Statement is required to be effective and usable will be extended by the
number of days during which such registration statement was not effective or
usable pursuant to the foregoing provisions.
31
<PAGE>
The Registration Rights Agreement provides that (i) Adelphia will use its
reasonable efforts to file an Exchange Offer Registration Statement with the
Commission on or prior to 90 days after the Closing Date, (ii) Adelphia will
use its best efforts to have the Exchange Offer Registration Statement
declared effective by the Commission on or prior to 180 days after the Closing
Date (which 180-day period shall be extended for a number of days equal to the
number of Business Days, if any, that the Commission is officially closed
during such period), (iii) unless the Exchange Offer would not be permitted by
applicable law or Commission policy, Adelphia will commence the Exchange Offer
and use its best efforts to issue on or prior to 30 days after the date on
which the Exchange Offer Registration Statement was declared effective by the
Commission, New Notes in exchange for all Old Notes tendered prior thereto in
the Exchange Offer and (iv) if obligated to file the Shelf Registration
Statement, Adelphia will use its best efforts to file the Shelf Registration
Statement with the Commission on or prior to 60 days after such filing
obligation arises and to cause the Shelf Registration Statement to be declared
effective by the Commission on or prior to 90 days after such filing
obligation arises. If (a) Adelphia fails to file either of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) either of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for
such effectiveness (the "Effectiveness Target Date"), (c) Adelphia fails to
consummate the Exchange Offer within 30 days of the Effectiveness Target Date
with respect to the Exchange Offer Registration Statement, or (d) subject to
the last sentence of the preceding paragraph, the Shelf Registration Statement
or the Exchange Offer Registration Statement is declared effective but
thereafter ceases to be effective or usable in connection with resales of
Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then, subject to the last
sentence of the preceding paragraph, Adelphia will pay Liquidated Damages to
each Holder of Transfer Restricted Securities, with respect to the first 90-
day period immediately following the occurrence of such Registration Default,
in an amount equal to 0.25% per annum on the principal amount of Old Notes
constituting Transfer Restricted Securities held by such Holder. The amount of
the Liquidated Damages will increase by an additional 0.25% per annum with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of 2.0% per annum on
the principal amount of Old Notes constituting Transfer Restricted Securities.
All accrued Liquidated Damages will be paid by Adelphia in cash on each
Damages Payment Date to the Global Note Holder (and any Holder of Certificated
Securities who has given wire transfer instructions to Adelphia at least 10
Business Days prior to the Damages Payment Date) by wire transfer of
immediately available funds and to all other Holders of Certificated
Securities by mailing checks to their registered addresses. Following the cure
of all Registration Defaults, the accrual of Liquidated Damages will cease.
Holders of Old Notes will be required to make certain representations to
Adelphia (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
by reference to, all the provisions of the Registration Rights Agreement, a
copy of which will be available upon request to Adelphia.
Except as described below under "--Modification of Indenture," the Old Notes
and the New Notes will be considered collectively to be a single class for all
purposes under the Indenture, including, without limitation, waivers,
amendments, redemptions and repurchase offers, and for purposes of this
"Description of the Senior Notes" (except under this caption, "--Registration
Rights; Liquidated Damages") all reference herein to "Senior Notes" shall be
deemed to refer collectively to the Old Notes and any New Notes, unless the
context otherwise requires.
32
<PAGE>
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for
the full definition of all such terms as well as any other capitalized terms
used herein for which no definition is provided.
"Affiliate" means a Person (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, Adelphia, (ii) which beneficially owns or holds 10% or more of any class
of the voting Capital Stock of Adelphia, or (iii) of which 10% or more of the
voting Capital Stock is beneficially owned or held by Adelphia, a Restricted
Subsidiary or an Unrestricted Subsidiary of Adelphia. Without limitation, an
Affiliate also includes any director or executive officer of Adelphia. As used
herein, "Affiliate" shall not include a Restricted Subsidiary.
"Aggregate Excess Restricted Investments" means for any fiscal quarter the
aggregate of Excess Restricted Investments with respect to the Restricted
Investments in all of the Unrestricted Subsidiaries and Affiliates of
Adelphia.
"Allowable Securities" means (i) cash equivalents, (ii) common or preferred
Capital Stock in a Person which (x) has Investment Grade Senior Debt or (y)
whose ratio of Indebtedness plus Preferred Stock to Annualized Pro Forma
EBITDA is less than 7.75:1, or (iii) debt securities issued by a Person which
(x) has Investment Grade Senior Debt or (y) whose Leverage Ratio is less than
7.75:1, provided that the securities in (ii)(y) and (iii)(y) above shall only
be deemed to be Allowable Securities if the principal business of the Person
is owning and operating cable television systems.
"Annualized Pro Forma EBITDA" means, with respect to any Person, (i) such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four,
minus (ii) in the case of Adelphia only, Adelphia's Aggregate Excess
Restricted Investments for such fiscal quarter.
"Asset Sale" means the sale, transfer or other disposition (other than to
Adelphia or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary, (b) all or substantially all of the
assets of Adelphia or of any Restricted Subsidiary, or (c) all or
substantially all of the assets of a Company System or part thereof serving at
least 5,000 basic subscribers, a division, line of business or comparable
business segment of Adelphia or any Restricted Subsidiary.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capital Stock Sale Proceeds" means the aggregate net sale proceeds
(including the fair market value of property, other than cash, as determined
by an independent appraisal firm) received by Adelphia from the issue or sale
(other than to a Subsidiary) by Adelphia of any class of its Capital Stock on
or after January 1, 1993 (including Capital Stock of Adelphia issued after
January 1, 1993 upon conversion of or in exchange for other securities of
Adelphia).
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles
and the amount of such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with generally accepted accounting
principles.
"Change of Control" means such time as (i) (a) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than
the Rigas Family and its Affiliates, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power required to elect or designate for election a majority of
Adelphia's Board of Directors and attaching to the then outstanding
33
<PAGE>
voting Capital Stock of Adelphia and (b) the Rigas Family, together with its
Affiliates, is not at such time the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than 35% of the total voting power
required to elect or designate for election a majority of Adelphia's Board of
Directors and attaching to the then outstanding voting Capital Stock of
Adelphia, or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted Adelphia's Board
of Directors (together with any new directors whose election by Adelphia's
Board of Directors or whose nomination for election by Adelphia's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved or approved by
the Rigas Family and its Affiliates at a time when they had the right or
ability by voting right, contract or otherwise to elect or designate for
election a majority of Adelphia's Board of Directors) cease for any reason to
constitute a majority of the directors then in office.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Consolidated Fixed Charge Ratio" means, for any Person, for any period, the
ratio of (i) Annualized Pro Forma EBITDA to (ii) Consolidated Interest Expense
for such period multiplied by four.
"Consolidated Interest Expense" means, for any Person, for any period, the
amount of interest in respect of Indebtedness (including amortization of
original issue discount, amortization of debt issuance costs, and non-cash
interest payments on any Indebtedness and the interest portion of any deferred
payment obligation and after taking into account the effect of elections made
under any Interest Rate Agreement, however denominated, with respect to such
Indebtedness), the amount of Redeemable Dividends and the interest component
of rentals in respect of any Capitalized Lease Obligation paid, accrued or
scheduled to be paid or accrued by such Person during such period, determined
on a consolidated basis in accordance with generally accepted accounting
principles. For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by such Person to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with generally accepted accounting principles
consistently applied.
"Cumulative Credit" means the sum of (i) Capital Stock Sale Proceeds plus
(ii) cumulative EBITDA of Adelphia from and after January 1, 1993 to the end
of the fiscal quarter immediately preceding the date of a proposed Restricted
Payment, or, if such cumulative EBITDA for such period is negative, minus the
amount by which such cumulative EBITDA is less than zero.
"Cumulative Interest Expense" means the aggregate amount of Consolidated
Interest Expense paid, accrued or scheduled to be paid or accrued by Adelphia
from January 1, 1993 to the end of the fiscal quarter immediately preceding a
proposed Restricted Payment, determined on a consolidated basis in accordance
with generally accepted accounting principles.
"EBITDA" means, for any Person, for any period, an amount equal to (A) the
sum of (i) consolidated net income for such period (exclusive of any gain or
loss realized in such period upon an Asset Sale), plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing consolidated net income and any provision
for taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period, plus (iv) depreciation for such
period on a consolidated basis, plus (v) amortization of intangibles for such
period on a consolidated basis, plus (vi) any other non-cash items reducing
consolidated net income for such period, minus (B) all non-cash items
increasing consolidated net income for such period, all for such Person and
its Subsidiaries determined in accordance with generally accepted accounting
principles consistently applied, except that with respect to Adelphia each of
the foregoing items shall be determined on a consolidated basis with respect
to Adelphia and its Restricted Subsidiaries only.
34
<PAGE>
"Excess Restricted Investment" means, with respect to any particular
Unrestricted Subsidiary or Affiliate of Adelphia for a fiscal quarter, the
lesser of the amounts described in the following clauses (i) and (ii), or, if
such amounts are equal, such amount:
(i) the aggregate amount of any Restricted Investments (other than the
Initial Investment) made by Adelphia or any Restricted Subsidiary with
respect to such Unrestricted Subsidiary or Affiliate and during the
twelve-month period ending on the last day of such fiscal quarter;
(ii) cash income received during such quarter by Adelphia with respect to
its Restricted Investments in such Unrestricted Subsidiary or
Affiliate multiplied by four;
and provided that cash income from a particular Restricted Investment shall be
included only (x) if cash income has been received by Adelphia with respect to
such Restricted Investment during each of the previous two fiscal quarters, or
(y) if the cash income derived from such Restricted Investment is attributable
to Allowable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Indebtedness" is defined to mean (without duplication), with respect to any
Person, any indebtedness, secured or unsecured, contingent or otherwise, which
is for borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments or representing the balance
deferred and unpaid of the purchase price of any property (excluding, without
limitation, any balances that constitute subscriber advance payments and
deposits, accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared in accordance with generally accepted accounting
principles, and shall also include, to the extent not otherwise included (i)
any Capitalized Lease Obligations, (ii) obligations secured by a lien to which
the property or assets owned or held by such Person is subject, whether or not
the obligation or obligations secured thereby shall have been assumed, (iii)
guaranties of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear upon
the balance sheet of the guarantor), (iv) in the case of Adelphia, Preferred
Stock of its Restricted Subsidiaries and (v) obligations of any such Person
under any Interest Rate Agreement applicable to any of the foregoing.
Notwithstanding the foregoing, Indebtedness shall not include any interest or
accrued interest until due and payable.
"Initial Investment" means the Restricted Investment in a Person made by
Adelphia or a Restricted Subsidiary that first results in such Person becoming
an Unrestricted Subsidiary or Affiliate of Adelphia, except that in the case
of Olympus, "Initial Investment" shall mean any Restricted Investment made in
Olympus since February 22, 1994, but only to the extent that such Restricted
Investment when aggregated with the other Restricted Investments made in
Olympus since such date does not exceed $25,000,000.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Investment Grade Senior Debt" means, with respect to any Person,
Indebtedness of such Person which has been rated with an investment grade
rating by Moody's or Standard & Poor's.
"Leverage Ratio" is defined as the ratio of (i) the outstanding Indebtedness
of a Person and its Subsidiaries (or in the case of Adelphia, its Restricted
Subsidiaries) divided by (ii) the Annualized Pro Forma EBITDA of such Person.
"Lien" means with respect to any property or assets of Adelphia (it being
understood that for purposes of this definition property or assets of Adelphia
do not include property or assets of any Subsidiary of Adelphia) any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien, charge, easement (other than any easement not
materially impairing usefulness or marketability), encumbrance,
35
<PAGE>
preference, priority, or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation, conditional
sale, or other title retention agreement having substantially the same
economic effect as any of the foregoing) except for (i) liens for taxes,
assessments or governmental charges or levies on property if the same shall
not at the time be delinquent or thereafter can be paid without penalty, or
are being contested in good faith and by appropriate proceedings; (ii) liens
imposed by law, such as carriers', warehousemen's and mechanics' liens and
other similar liens arising in the ordinary course of business which secure
payment of obligations not more than sixty (60) days past due or are being
contested in good faith and by appropriate proceedings; (iii) other liens
incidental to the conduct of its business or the ownership of its property and
assets which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit and which do not in the aggregate
materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business; (iv) utility
easements, building restrictions and such other encumbrances or charges
against real property as are of a nature generally existing with respect to
properties of a similar character; or (v) liens arising upon entry of a
confession of judgment in Pennsylvania courts in connection with borrowings
not in excess of $1,000,000 in aggregate.
"Permitted Investments" means, for any Person, Restricted Investments made
on or after February 22, 1994 consisting of (i) advances for less than one
year issued in the ordinary course of business for working capital purposes or
for the purchase of property, plant and equipment in an amount not to exceed
$5,000,000 in the aggregate outstanding, (ii) with respect to a Restricted
Investment in Olympus, $25,000,000 plus the aggregate amount of cash income
received by Adelphia from Olympus, minus the aggregate amount of all
Restricted Investments made since February 22, 1994, with respect to Olympus,
(iii) $20,000,000 plus the cash proceeds from the sale or redemption of, or
income from, any Restricted Investments made on or after January 1, 1993,
minus the aggregate amount of all Restricted Investments (excluding Restricted
Investments made with respect to Olympus) since January 1, 1993, (iv) non-cash
Restricted Investments made with the non-cash proceeds from the sale or
redemption of, or income from, any Restricted Investments, or (v) an amount
which, at the time of such Restricted Investment, does not exceed the amount
of Restricted Payments that could then be made by Adelphia and its Restricted
Subsidiaries under the covenant set forth under "Limitations on Restricted
Payments"; provided further that no Restricted Investments may be made under
(ii), (iii), (iv) or (v) unless pro forma for such Restricted Investment
Adelphia could incur $1 of debt under the first paragraph of the covenant set
forth under "Limitation on Indebtedness."
"Permitted Refinancing Indebtedness" means any renewals, extensions,
substitutions, refinancings or replacements of any Indebtedness, including any
successive extensions, renewals, substitutions, refinancings or replacements
so long as (i) the aggregate amount of Indebtedness represented thereby is not
increased by such renewal, extension, substitution, refinancing or
replacement, (ii) in the case of Indebtedness of Adelphia, the average life
and the date such Indebtedness is scheduled to mature is not shortened and
(iii) in the case of Indebtedness of Adelphia, the new Indebtedness shall not
be senior in right of payment to the Indebtedness that is being extended,
renewed, substituted, refinanced or replaced.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied after giving effect to the
following: (i) if, during or after such period, such Person or any of its
Subsidiaries shall have made any Asset Sale, Pro Forma EBITDA of such Person
and its Subsidiaries for such period shall be reduced by an amount equal to
the Pro Forma EBITDA (if positive) directly attributable to the assets which
are the subject of such Asset Sale for the period or increased by an amount
equal to the Pro Forma EBITDA (if negative) directly attributable thereto for
such period and (ii) if, during or after such period, such Person or any of
its Subsidiaries completes an acquisition of any Person or business which
immediately after such acquisition is a Subsidiary of such Person or whose
assets are held directly by such Person or a Subsidiary of such Person, Pro
36
<PAGE>
Forma EBITDA shall be computed so as to give pro forma effect to the
acquisition of such Person or business; and provided further that, with
respect to Adelphia, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or
"Restricted Subsidiaries" of Adelphia.
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention of Adelphia to effect a Change of Control.
"Rating Decline" means the occurrence of the following on, or within 90 days
after, the date of public notice of the occurrence of a Change of Control or
of the intention by Adelphia to effect a Change of Control (which period shall
be extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrade by Moody's or Standard & Poor's): (a) in
the event the Notes are rated by either Moody's or Standard & Poor's on the
Rating Date as Investment Grade Senior Debt, the rating of the Notes by both
Moody's and Standard & Poor's Corporation shall be below Investment Grade
Senior Debt; or (b) in the event the Notes are rated below Investment Grade
Senior Debt by both Moody's and Standard & Poor's on the Rating Date, the
rating of the Notes by either Moody's or Standard and Poor's shall be
decreased by one or more gradations (including gradations within rating
categories as well as between rating categories).
"Redeemable Dividend" means, for any dividend with regard to Redeemable
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means, with respect to any Person, any Capital Stock that
by its terms or otherwise is required to be redeemed or is redeemable at the
option of the holder at any time prior to the maturity of the Notes.
"Restricted Investment" means any advance, loan, account receivable (other
than an account receivable arising in the ordinary course of business), or
other extension of credit (excluding, however, accrued and unpaid interest in
respect of any advance, loan or other extension of credit) or any capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others, or otherwise), any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership or
joint venture) of, or any bank accounts with or guarantee of any Indebtedness
or other obligations of, any Unrestricted Subsidiary or Affiliate of Adelphia.
"Restricted Payment" means (i) any dividend or distribution (whether made in
cash, property or securities), on or with respect to any shares of Capital
Stock of Adelphia or Capital Stock of any Subsidiary which is consolidated
with Adelphia in accordance with generally accepted accounting principles
consistently applied, except for any dividend or distribution which is made
solely to Adelphia or another Subsidiary or dividends or distributions payable
solely in shares of Common Stock of Adelphia, or (ii) any redemption,
repurchase, retirement or other direct or indirect acquisition of (a)
Indebtedness of Adelphia which is subordinate in right of payment to the
Notes, except by exchange for or out of the proceeds of the substantially
concurrent issuance of Permitted Refinancing Indebtedness or from the proceeds
of a sale of Capital Stock by Adelphia or (b) shares of Capital Stock of
Adelphia or any warrants, rights or options to directly or indirectly purchase
or acquire any such Capital Stock of Adelphia or any securities exchangeable
for or convertible into any such shares, other than options issued or shares
purchased or granted under Adelphia's Stock Option Plan of 1986 or Adelphia's
Restricted Stock Bonus Plan, from any employee of Adelphia or any of its
Subsidiaries who, together with any Person that, directly or indirectly,
controls (other than by virtue of being directly or indirectly the employer of
such employee), is controlled by or is under common control with such
employee, owns less than 1% of the outstanding Capital Stock of Adelphia,
except for the purchase, redemption, retirement or other acquisition of any
shares of Adelphia's Capital Stock by exchange for, or out of the proceeds of
the substantially concurrent sale of, other shares of its Capital Stock other
than any capital stock which, by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable), or upon the
happening of any event, matures
37
<PAGE>
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to March 1, 2007.
"Restricted Subsidiary" means (a) any Subsidiary of Adelphia, whether
existing on or after the date of the Indenture, unless such Subsidiary is an
Unrestricted Subsidiary or shall have been classified as an Unrestricted
Subsidiary by a resolution adopted by the Board of Directors of Adelphia and
(b) an Unrestricted Subsidiary which is reclassified as a Restricted
Subsidiary by a resolution adopted by the Board of Directors of Adelphia,
provided that on and after the date of such reclassification such Unrestricted
Subsidiary shall not incur Indebtedness other than that permitted to be
incurred by a Restricted Subsidiary under the provisions of the Indenture.
"Rigas Family" means collectively John J. Rigas and members of his immediate
family, any of their respective spouses, estates, lineal descendants, heirs,
executors, personal representatives, administrators, trusts for any of their
benefit and charitable foundations to which shares of Adelphia's Capital Stock
beneficially owned by any of the foregoing have been transferred.
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which
more than 50% of the total voting power of the Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the
direction of the management and policies of such entity by contract or
otherwise if in accordance with generally accepted accounting principles such
entity is consolidated with the first-named Person for financial statement
purposes.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary, (b) any Subsidiary of Adelphia which is classified after the date
of the Indenture as an Unrestricted Subsidiary by a resolution adopted by the
Board of Directors of Adelphia and (c) any subsidiary which as of the date of
the Indenture has been declared an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of Adelphia; provided that a Subsidiary
organized or acquired after the date of the Indenture may be so classified as
an Unrestricted Subsidiary only if immediately after the date of such
classification, any investment by Adelphia and its Restricted Subsidiaries in
such Subsidiary made at the time of the organization or acquisition of such
Subsidiary would be a Restricted Investment permissible under the Indenture.
The Trustee shall be given prompt notice by Adelphia of each resolution
adopted by its Board of Directors under this provision, together with a copy
of each such resolution adopted.
SUBORDINATION TO SUBSIDIARY DEBT
All liabilities of Adelphia's subsidiaries will be effectively senior in
right of payment to the Senior Notes. As of March 31, 1997, the total
indebtedness of such subsidiaries to banks and institutions, on a consolidated
basis, aggregated approximately $1.2 billion. See "Risk Factors--Holding
Company Structure; Restrictive Covenants."
COVENANTS
The Indenture contains, among others, the following covenants. Except as
otherwise specified, all of the covenants described below appear in the
Indenture.
Limitation on Indebtedness. The Indenture provides that Adelphia will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, issue, assume or become liable for, contingently or otherwise
(collectively an "incurrence"), any Indebtedness (other than the $350,000,000
of Senior Notes originally issued under the Indenture) unless, after giving
effect to such incurrence on a pro forma basis, Indebtedness of Adelphia and
its Restricted Subsidiaries, on a consolidated basis, shall not be more than
the
38
<PAGE>
product of the Annualized Pro Forma EBITDA for the latest fiscal quarter
preceding such incurrence for which financial statements are available,
multiplied by 8.75.
Notwithstanding the above, the Indenture does not limit the incurrence of
Indebtedness which is incurred by Adelphia or its Restricted Subsidiaries for
working capital purposes or capital expenditures with respect to plant,
property and equipment of Adelphia and its Restricted Subsidiaries in an
aggregate amount not to exceed $50,000,000. Further, the Indenture does not
limit Permitted Refinancing Indebtedness, subject to the provisions of the
covenant set forth under "Limitation on Restricted Payments."
Limitation on Restricted Payments. The Indenture provides that, so long as
any of the Senior Notes remain outstanding, Adelphia shall not make, and shall
not permit any Restricted Subsidiary to make, any Restricted Payment (as
defined above) if (a) at the time of such proposed Restricted Payment, a
Default or Event of Default shall have occurred and be continuing or shall
occur as a consequence of such Restricted Payment, or (b) immediately after
giving effect to any such Restricted Payment, the aggregate of all Restricted
Payments which shall have been made on or after January 1, 1993 (the amount of
any Restricted Payment, if other than cash, to be based upon fair market value
as determined in good faith by Adelphia's Board of Directors whose
determination shall be conclusive) would exceed an amount equal to the greater
of (i) the sum of $5,000,000 or (ii) the difference between (a) the Cumulative
Credit (as defined above) and (b) the sum of the aggregate amount of all
Restricted Payments, and all Permitted Investments made pursuant to clause (v)
of the definition of "Permitted Investments," made on or after January 1, 1993
plus 1.2 times Cumulative Interest Expense (as defined above).
Mergers and Consolidations. The Indenture provides that Adelphia may not
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction
or a series of related transactions), to any Person unless: (i) Adelphia shall
be the continuing Person, or the Person (if other than Adelphia) formed by
such consolidation or into which Adelphia is merged or to which the properties
and assets of Adelphia are transferred shall be a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all of the obligations of Adelphia under the Senior Notes and the Indenture,
and the obligations under the Indenture shall remain in full force and effect;
(ii) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and (iii) immediately after giving effect to such transaction on a
pro forma basis for the most recent quarter, the pro forma Consolidated Fixed
Charge Ratio of the surviving entity shall be at least 1:1; provided that, if
the Consolidated Fixed Charge Ratio of Adelphia for the most recent quarter
preceding such transaction is within the range set forth in Column A below,
then the pro forma Consolidated Fixed Charge Ratio of the surviving entity
after giving effect to such transaction shall be at least equal to the greater
of the percentage of the Consolidated Fixed Charge Ratio of Adelphia for the
most recent quarter preceding such transaction set forth in Column B or the
ratio set forth in Column C below:
<TABLE>
<S> <C> <C>
A B C
----- ----- ------
1.1111:1 to 1.4999:1 90% 1.00:1
1.5 and higher 80% 1.35:1
</TABLE>
and provided, further, that if the pro forma Consolidated Fixed Charge Ratio
of the surviving entity is 2:1 or more, the calculation in the preceding
proviso shall be inapplicable and such transaction shall be deemed to have
complied with the requirements of such proviso.
In connection with any consolidation, merger or transfer contemplated by
this provision, Adelphia shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
39
<PAGE>
Limitations on Investment in Affiliates and Unrestricted Subsidiaries. After
the date of the Indenture, Adelphia may not, nor will Adelphia allow any
Restricted Subsidiary to, make a Restricted Investment other than by way of
Permitted Investments unless pro forma for such Restricted Investment the
Leverage Ratio of Adelphia does not exceed 7.75:1.
Covenant to Secure Notes Equally. The Indenture provides that except for
Liens created or assumed by Adelphia in connection with the acquisition of
real property or equipment to be used by Adelphia in the operation of its
business which do not secure Indebtedness in excess of the purchase price of
such real property or equipment, Adelphia covenants that, if it shall create
or assume any Lien upon any of its property or assets, whether now owned or
hereafter acquired, it will make or cause to be made effective provisions
whereby the Notes will be secured by such Lien equally and ratably with all
other Indebtedness of Adelphia secured by such Lien, as long as any such other
Indebtedness of Adelphia shall be so secured. The restriction imposed by this
covenant shall not apply with respect to a Lien, including a pledge of Capital
Stock of a Subsidiary or an Affiliate, to secure Indebtedness which is an
obligation of such Subsidiary or Affiliate and not an obligation of Adelphia.
Limitation on Transactions with Affiliates. The Indenture provides that
Adelphia will not, and will not permit any Restricted Subsidiary to, engage in
any transaction with any Affiliate upon terms which would be any less
favorable than those obtainable by Adelphia or a Restricted Subsidiary in a
comparable arm's-length transaction with a person which is not an Affiliate.
The Indenture provides that Adelphia will not, and will not permit any
Restricted Subsidiary to, engage in any transaction (or series of related
transactions) involving in the aggregate $1,000,000 or more with any Affiliate
except for (i) the making of any Restricted Payment, (ii) any transaction or
series of transactions between Adelphia and one or more of its Restricted
Subsidiaries or between two or more of its Restricted Subsidiaries (provided
that no more than 5% of the equity interest in any of its Restricted
Subsidiaries is owned by an Affiliate), and (iii) the payment of compensation
(including, without limitation, amounts paid pursuant to employee benefit
plans) for the personal services of officers, directors and employees of
Adelphia or any of its Restricted Subsidiaries, so long as the Board of
Directors of Adelphia in good faith shall have approved the terms thereof and
deemed the services theretofore or thereafter to be performed for such
compensation or fees to be fair consideration therefor; and provided further
that for any Asset Sale, or a sale, transfer or other disposition (other than
to Adelphia or any of its Restricted Subsidiaries) of an interest in a
Restricted Investment, involving an amount greater than $25,000,000, such
Asset Sale or transfer of interest in a Restricted Investment is for fair
value as determined by an opinion of a nationally recognized investment
banking firm filed with the Trustee. Notwithstanding the foregoing, the
Indenture provides that such provision will not prohibit any such transaction
which is determined by the independent members of the Board of Directors of
Adelphia, in their reasonable, good faith judgment (as evidenced by a Board
Resolution filed with the Trustee) to be (a) in the best interests of Adelphia
or such Restricted Subsidiary, and (b) upon terms which would be obtainable by
Adelphia or a Restricted Subsidiary in a comparable arm's-length transaction
with a Person which is not an Affiliate.
Limitation on Sale of Assets. The Indenture provides that neither Adelphia
nor a Restricted Subsidiary shall sell an asset (including Capital Stock of
Restricted Subsidiaries) or reclassify a Restricted Subsidiary existing on the
date of the Indenture as an Unrestricted Subsidiary (a "Reclassification")
unless (a) in the case of an asset sale, (i) at least 75% of the net proceeds
received by Adelphia or such Restricted Subsidiary is in cash, cash
equivalents or common or preferred Capital Stock or debt securities issued by
a Person which has Investment Grade Senior Debt, and (ii) cash proceeds from
the asset sale are used to reduce debt and such debt reduction results in
Adelphia's Leverage Ratio being lower pro forma after such asset sale than
prior to such asset sale, or (b) in the case of an asset sale or
Reclassification, pro forma for such asset sale or Reclassification the
Indebtedness of Adelphia and its Restricted Subsidiaries, on a consolidated
basis, shall not be more than 7.75 multiplied by Annualized Pro Forma EBITDA,
provided that in no case under either clause (a) or (b) shall Adelphia
undertake an asset sale or Reclassification, if pro forma for such an asset
sale or Reclassification Adelphia and its Restricted Subsidiaries would be the
owners of fewer than 75% of the cable systems (measured on the basis of basic
subscribers as of February 22, 1994) owned by Adelphia and its Restricted
Subsidiaries as
40
<PAGE>
of February 22, 1994, provided however, that Adelphia and its Restricted
Subsidiaries may sell additional assets of up to 10% of assets held as of
February 22, 1994 if the consideration received from such sale is (i) cash
which is used within 12 months to purchase additional systems of equivalent
value or (ii) other cable systems of equivalent value.
Change of Control Offer. Within 50 days of (i) the proposed occurrence of a
Change of Control or (ii) the occurrence of a Change of Control Triggering
Event, Adelphia shall notify the Trustee in writing of such proposed
occurrence or occurrence, as the case may be, and shall make an offer to
purchase (the "Change of Control Offer") the Senior Notes at a purchase price
equal to 100% of the principal amount thereof plus any accrued and unpaid
interest thereon to the Change of Control Payment Date (as hereinafter
defined) (the "Change of Control Purchase Price") in accordance with the
procedures set forth in this covenant.
Within 50 days of (i) the proposed occurrence of a Change of Control or (ii)
the occurrence of a Change of Control Triggering Event, Adelphia also shall
(a) cause a notice of the Change of Control Offer to be sent at least once to
the Dow Jones News Service or similar business news service in the United
States and (b) send by first-class mail, postage prepaid, to the Trustee and
to each holder of the Senior Notes, at his address appearing in the register
of the Senior Notes maintained by the Registrar, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment,
provided that a Change of Control Triggering Event has occurred and
otherwise subject to the terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 50 days from the date such
notice is mailed and no later than 15 days after the date of the
corresponding Change of Control Triggering Event) (the "Change of
Control Payment Date");
(3) that any Senior Note not tendered will continue to accrue interest;
(4) that, unless Adelphia defaults in the payment of the Change of Control
Purchase Price, any Senior Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(5) that holders accepting the offer to have their Senior Notes purchased
pursuant to a Change of Control Offer will be required to surrender
the Notes to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(6) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of the Senior Notes delivered
for purchase, and a statement that such holder is withdrawing his
election to have such Senior Notes purchased;
(7) that holders whose Senior Notes are being purchased only in part will
be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior Notes surrendered, provided that
each Senior Note purchased and each such new Senior Note issued shall
be in an original principal amount in denominations of $1,000 and
integral multiples thereof; and
(8) any other procedures that a holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance.
Notwithstanding any other provision of this covenant, in the case of a
notice of a Change of Control Offer that is being furnished by Adelphia with
respect to a proposed Change of Control that has not yet actually occurred,
the Company may specify in such notice that holders of the Senior Notes shall
be required to notify Adelphia, by a date not later than the date (the
"Proposed Change of Control Response Date") which is 30 days
41
<PAGE>
from the date of such notice, as to whether such holders will tender their
Senior Notes for payment pursuant to the Change of Control Offer and to notify
Adelphia of the principal amount of such Senior Notes to be so tendered (with
the failure of any holder to so notify Adelphia within such 30-day period to
be deemed an election of such holder not to accept such Change of Control
Offer). In such event, Adelphia shall have the option, to be exercised by a
subsequent written notice to be sent, no later than 15 days after the Proposed
Change of Control Response Date, to the same Persons to whom the original
notice of the Change of Control Offer was sent, to cancel or otherwise effect
the termination of the proposed Change of Control and to rescind the related
Change of Control Offer, in which case the then outstanding Change of Control
Offer shall be deemed to be null and void and of no further effect.
On the Change of Control Payment Date, Adelphia shall (a) accept for payment
Senior Notes or portions thereof tendered pursuant to the Change of Control
Offer, (b) deposit with the Paying Agent money sufficient to pay the purchase
price of all Senior Notes or portions thereof so tendered and (c) deliver or
cause to be delivered to the Trustee Senior Notes so accepted together with an
Officers' Certificate stating the Senior Notes or portions thereof tendered to
Adelphia. The Paying Agent shall promptly mail to each holder of Senior Notes
so accepted payment in an amount equal to the purchase price for such Senior
Notes, and the Trustee shall promptly authenticate and mail to such holder a
new Senior Note equal in principal amount to any unpurchased portion of the
Senior Notes surrendered; provided that each such new Senior Note shall be
issued in an original principal amount in denominations of $1,000 and integral
multiples thereof.
There shall be no purchase of any Senior Notes pursuant to this covenant if
there has occurred (prior to, on or after, as the case may be, the tender of
such Senior Notes pursuant to the Change of Control Offer, by the holders of
such Senior Notes) and is continuing an Event of Default. The Paying Agent
will promptly return to the respective holders thereof any Senior Notes (a)
the tender of which has been withdrawn in compliance with the Indenture or (b)
held by it during the continuance of an Event of Default (other than a default
in the payment of the Change of Control Purchase Price with respect to such
Senior Notes).
Because a "Change of Control" for purposes of this covenant is defined in
terms of "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act) of voting power, there may be circumstances in which the Rigas Family
could beneficially own (for purposes of Rule 13d-3) more than 35% of the
outstanding voting Capital Stock of Adelphia through options, warrants or
other purchase rights while directly holding 35% or less of the total voting
power required to elect or designate for election a majority of Adelphia's
Board of Directors, without a Change of Control Triggering Event occurring.
Further, a change in the composition of the Board of Directors of Adelphia
could occur without the occurrence of a Change of Control Triggering Event if
either the election or the nomination of the new directors was approved by
two-thirds of the continuing directors or by the Rigas Family and its
Affiliates. See "Certain Definitions--Change of Control."
The indentures for the 12 1/2% Notes, the 10 1/4% Notes, the 9 1/2% Notes,
the 11 7/8% Debentures and the 9 7/8% Debentures, which together represent
outstanding indebtedness in the aggregate principal amount of approximately
$827,398,000 as of March 31, 1997, provide that Adelphia must make an offer to
purchase such Notes and Debentures, respectively, at a purchase price equal to
100% of the principal amount thereof, plus any accrued but unpaid interest
thereon, in the event of circumstances identical to those which trigger a
Change of Control Offer under this covenant. In addition, the credit
agreements of Adelphia's subsidiaries generally contain provisions under which
circumstances that would trigger a Change of Control Offer under this covenant
would constitute an event of default under such credit agreements. In the
event that Adelphia is required to purchase 12 1/2% Notes, the 10 1/4% Notes,
the 9 1/2% Notes, 11 7/8% Debentures, 9 7/8% Debentures the 10 1/4% Notes, the
9 1/2% Notes, and Senior Notes in accordance with such provisions, and the
indebtedness under such subsidiary credit agreements were to be accelerated,
the source of funds for such purchases or payments will be Adelphia's
available cash, cash generated from Adelphia's operating activities, and other
sources including borrowings, asset sales or equity sales. There can be no
assurance that sufficient funds would be available to make any required
repurchases under the Indenture and under the indentures for the 12 1/2%
Notes, the 10 1/4% Notes, the 9 1/2% Notes, the 11 7/8% Debentures 12 1/2% and
the 9 7/8% Debentures or any such required payments under such credit
agreements. Although in the past Adelphia has been able to both refinance its
indebtedness or
42
<PAGE>
obtain new financing, there can be no assurance that Adelphia would be able to
do so under such circumstances or that, if Adelphia were able to do so, the
terms would be favorable to Adelphia. In the event that Adelphia is required
to make a Change of Control Offer, Adelphia will comply with all applicable
tender offer rules including Rule 14e-1 under the Exchange Act, to the extent
applicable.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default in payment of any principal of the Senior Notes; (ii) default for
30 days in payment of any interest on the Notes; (iii) default by Adelphia in
the observance or performance of any other covenant in the Senior Notes or the
Indenture for 60 days after written notice from the Trustee or the holders of
not less than 25% in aggregate principal amount of the Senior Notes then
outstanding; (iv) failure to pay when due principal, interest or premium
aggregating $10,000,000 or more with respect to any Indebtedness of Adelphia
or any Restricted Subsidiary or the acceleration of any such Indebtedness
which default shall not be cured or waived, or such acceleration shall not be
rescinded or annulled, within ten days after written notice as provided in the
Indenture; (v) any final judgment or judgments for the payment of money in
excess of $10,000,000 shall be rendered against Adelphia or any Restricted
Subsidiary and shall not be discharged for any period of 60 consecutive days
during which a stay of enforcement shall not be in effect; or (vi) certain
events involving bankruptcy, insolvency or reorganization of Adelphia or any
Restricted Subsidiary with liabilities of greater than $10,000,000 under
generally accepted accounting principles as of the date of such bankruptcy,
insolvency or reorganization. The Indenture provides that the Trustee may
withhold notice to the holders of the Senior Notes of any default (except in
payment of principal or interest on the Senior Notes) if the Trustee considers
it to be in the best interest of the holders of the Senior Notes to do so.
The Indenture provides that if an Event of Default (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Senior Notes
then outstanding may declare to be immediately due and payable the principal
amount of all the Senior Notes then outstanding plus accrued but unpaid
interest to the date of acceleration; provided, however, that after such
acceleration but before a judgment or decree based on acceleration is obtained
by the Trustee, the holders of a majority in aggregate principal amount of
outstanding Senior Notes may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the nonpayment of
accelerated principal or interest, have been cured or waived as provided in
the Indenture. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization shall occur, such amount with respect
to all of the Senior Notes shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the holders of Senior
Notes.
The holders of a majority in principal amount of the Senior Notes then
outstanding shall have the right to waive any existing default or compliance
with any provision of the Indenture or the Senior Notes and to direct the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, subject to certain limitations specified in the Indenture.
No holder of any Senior Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless also the holders of at least 25% in aggregate
principal amount of the outstanding Senior Notes shall have made written
request and offered reasonable indemnity to the Trustee to institute such
proceeding as a trustee, and unless the Trustee shall not have received from
the holders of a majority in aggregate principal amount of the outstanding
Senior Notes a direction inconsistent with such request and shall have failed
to institute such proceeding within 60 days. However, such limitations do not
apply to a suit instituted by a holder of a Senior Note for enforcement of
payment of the principal of or interest on such Senior Note on or after the
respective due dates expressed in such Senior Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides Adelphia may elect either (a) to defease and be
discharged from any and all obligations with respect to the Senior Notes
(except for the obligations to register the transfer or exchange of
43
<PAGE>
such Senior Notes, to replace temporary or mutilated, destroyed, lost or
stolen Senior Notes, to maintain an office or agency in respect of the Senior
Notes and to hold monies for payment in trust) ("defeasance") or (b) to be
released from its obligations with respect to the Senior Notes under certain
covenants contained in the Indenture and described above under "Covenants"
("covenant defeasance"), upon the deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money and/or U.S.
Government Obligations which through the payment of principal and interest in
accordance with their terms will provide money, in an amount sufficient to pay
the principal of and interest on the Senior Notes, on the scheduled due dates
therefor in accordance with the terms of the Indenture. Such a trust may only
be established if, among other things, Adelphia has delivered to the Trustee
an Opinion of Counsel (as specified in the Indenture) to the effect that the
holders of the Senior Notes or persons in their positions will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred. Such
opinion, in the case of defeasance under clause (a) above, must refer to and
be based upon a private ruling of the Internal Revenue Service concerning the
Senior Notes or a ruling of general effect published by the Internal Revenue
Service.
MODIFICATION OF INDENTURE
From time to time, Adelphia and the Trustee may, without the consent of
holders of the Notes, amend the Indenture or the Senior Notes or supplement
the Indenture for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, issuing up to
$250,000,000 in aggregate principal amount of additional Senior Notes pursuant
to the Indenture and curing any ambiguity, defect or inconsistency, or making
any other change that does not materially and adversely affect the rights of
any holder. The Indenture contains provisions permitting Adelphia and the
Trustee, with the consent of holders of at least one-half in principal amount
of the outstanding Senior Notes, to modify or supplement the Indenture or the
Senior Notes, except that no such modification shall, without the consent of
each holder affected thereby, (i) reduce the amount of Senior Notes whose
holders must consent to an amendment, supplement, or waiver to the Indenture
or the Senior Notes, (ii) reduce the rate of or change the time for payment of
interest on any Senior Note, (iii) reduce the principal of or change the
stated maturity of any Senior Note, (iv) make any Senior Note payable in money
other than that stated in the Senior Note or change the place of payment from
New York, New York, (v) change the amount or time of any payment required by
the Senior Notes or provide for the redemption of the Senior Notes prior to
maturity, (vi) waive a default on the payment of the principal of, interest
on, or redemption payment with respect to any Senior Note, or (vii) take any
other action otherwise prohibited by the Indenture to be taken without the
consent of each holder affected thereby.
REPORTS TO HOLDERS
So long as Adelphia is subject to the periodic reporting requirements of the
Exchange Act it will continue to furnish the information required thereby to
the Commission and to the holders of the Senior Notes. The Indenture provides
that even if Adelphia is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Senior Notes, it will
nonetheless continue to furnish such information to the Commission (at such
time as it would be required to file such reports under the Exchange Act) and
to the Trustee and the holders of the Senior Notes (within 15 days thereafter
as required by the Indenture) as if it were subject to such periodic reporting
requirements.
COMPLIANCE CERTIFICATE
Adelphia will deliver to the Trustee on or before 105 days after the end of
its fiscal year and on or before 50 days after the end of its second fiscal
quarter in each year an Officer's Certificate stating whether or not the
signers know of any Default or Event of Default that has occurred. If they do,
the certificate will describe the Default or Event of Default and its status.
THE TRUSTEE
Bank of Montreal Trust Company is to be the Trustee under the Indenture and
has been appointed by Adelphia as Registrar and Paying Agent with regard to
the Notes. Bank of Montreal Trust Company also serves
44
<PAGE>
as Registrar and Paying Agent and Trustee under the indentures with respect to
the 12 1/2% Senior Notes, the 10 1/4% Notes, the 9 1/2% Notes, the 11 7/8%
Debentures and the 9 7/8% Debentures. The Indenture provides that, except
during the continuance of an Event of Default, the Trustee will perform only
such duties as are specifically set forth in the Indenture. During the
existence of an Event of Default, the Trustee will exercise such rights and
powers vested in it under the Indenture and use the same degree of care and
skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes will initially be issued in the form of one or more registered
notes in global form (the "New Global Note," and together with the global
notes representing the Old Notes, the "Global Note") or in certificated form.
The New Global Note will be deposited on the Exchange Date with, or on behalf
of, the Depositary and registered in the name of the Global Note Holder. See
"Exchange Offer."
DTC has advised the Company that DTC is a limited-purpose trust company that
was created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The
Participants include securities brokers and dealers (including the Initial
Purchaser), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies (collectively, the "Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interests and
transfer of ownership interests of each actual purchaser of each security held
by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchaser with portions of the
principal amount of the Global Notes and (ii) ownership of such interests in
the Global Notes will be shown on, and the transfer of ownership thereof will
be effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Notes). Holders
are advised that the laws of some states require that certain persons take
physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in a Global Note to
such persons will be limited to such extent. Because DTC can act only on
behalf of Participants, which in turn act on behalf of Indirect Participants
and certain banks, the ability of a person having beneficial interests in a
Global Note to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests.
Payments in respect of the principal of and premium and Liquidated Damages,
if any, and interest on a Global Note registered in the name of DTC or its
nominee will be payable by the Trustee to DTC in its capacity as the
registered Holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee will treat the persons in whose names the Senior
Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company, the Trustee nor any agent of
the Company or the Trustee has or will have any responsibility or liability
for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Notes, or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect Participant's
records relating to the beneficial ownership interests in the Global Notes or
(ii) any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants. DTC has advised the Company that
its current practice, upon receipt of any payment in respect of securities
such as the Senior Notes (including principal and interest), is to credit the
accounts of the relevant Participants with the payment on the payment date, in
amounts proportionate to their respective holdings in the principal amount of
beneficial interests in the relevant security as shown on
45
<PAGE>
the records of DTC unless DTC has reason to believe it will not receive
payment on such payment date. Payments by the Participants and the Indirect
Participants to the beneficial owners of Senior Notes will be governed by
standing instructions and customary practices and will be the responsibility
of the Participants or the Indirect Participants and will not be the
responsibility of DTC, the Trustee or the Company. Neither the Company nor the
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Senior Notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED SENIOR NOTES
A Global Note is exchangeable for definitive Senior Notes in registered
certificated form if (i) DTC (a) notifies the Company that it is unwilling or
unable to continue as depositary for the Global Note and the Company thereupon
fails to appoint a successor depositary or (b) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Senior Notes in certificated form or (iii) there shall have occurred and be
continuing an Event of Default or any event which after notice or lapse of
time or both would be an Event of Default with respect to the Senior Notes. In
addition, beneficial interests in a Global Note may be exchanged for
certificated Senior Notes upon request but only upon at least 20 days prior
written notice given to the Trustee by or on behalf of DTC in accordance with
its customary procedures. In all cases, certificated Senior Notes delivered in
exchange for any Global Note or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested
by or on behalf of the depositary (in accordance with its customary
procedures) and will bear the applicable restrictive legend unless the Company
determines otherwise in compliance with applicable law.
EXCHANGE OF CERTIFICATED SENIOR NOTES FOR BOOK ENTRY NOTES
Senior Notes issued in certificated form may not be exchanged for beneficial
interests in any Global Note unless the transferor first delivers to the
Trustee a written certificate (in the form provided in the Indenture) to the
effect that such transfer will comply with the appropriate transfer
restrictions applicable to such Senior Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Senior Notes, and the Company and the Trustee may conclusively rely on, and
will be protected in relying on, instructions from the Global Note Holder or
the Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Senior Notes
represented by the Global Notes (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of
immediately available funds to the accounts specified by the Global Note
custodian. With respect to Senior Notes issued in definitive form, the Company
will make all payments of principal, premium, interest and Liquidated Damages,
if any, by mailing a check to each such Holder's registered address, provided
that all payments with respect to Senior Notes have an aggregate principal
amount of $1,000 or more, the Holders of which have given wire transfer
instructions to the Company at least ten business days prior to the applicable
payment date, will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. See "--
Principal, Maturity and Interest." The Senior Notes represented by the Global
Notes are expected to be eligible to trade in DTC's Same-Day Funds Settlement
System, and any permitted secondary market trading activity in such notes
will, therefore, be required by DTC to be settled in immediately available
funds. The Company expects that secondary trading in the Certificated Notes
also will be settled in immediately available funds.
46
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of the Old Notes for the New Notes,
but does not purport to be a complete analysis of all potential tax effects.
The discussion is based upon the United States Internal Revenue Code of 1986,
as amended, (the "Code"), Treasury Regulations, Internal Revenue Service
("IRS") rulings and pronouncements and judicial decisions now in effect, all
of which are subject to change at any time by legislative, judicial or
administrative action. Any such changes may be applied retroactively in a
manner that could adversely affect a holder of the New Notes. The following
discussion assumes that holders hold the Old Notes and the New Notes as
capital assets within the meaning of Section 1221 of the Code.
The Company has not sought and will not seek any rulings from the IRS with
respect to the positions of the Company discussed below. There can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the exchange of the Old Notes for the New Notes or that any
such position would not be sustained.
The tax treatment of a holder may vary depending on his or its particular
situation or status. This summary does not address the tax consequences to
taxpayers who are subject to special rules such as insurance companies, tax-
exempt organizations, financial institutions, broker-dealers, foreign entities
and individuals, persons holding Old Notes or New Notes as a part of a hedging
or conversion transaction or a straddle and holders whose "functional
currency" is not the U.S. dollar, or aspects of federal income taxation that
may be relevant to a prospective investor based upon such investor's
particular tax situation. In addition, the description does not consider the
effect of any applicable foreign, state, local or other tax laws.
EACH HOLDER SHOULD CONSULT HIS OR ITS OWN TAX ADVISER AS TO THE PARTICULAR
TAX CONSEQUENCES TO HIM OR IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE
The exchange of the New Notes for Old Notes will not constitute a
recognition event for federal income tax purposes. Consequently, no gain or
loss will be recognized by holders upon receipt of the New Notes. For purposes
of determining gain or loss upon the subsequent exchange of New Notes, a
holder's basis in the New Notes will be the same as a holder's basis in the
Old Notes exchanged therefor. Holders will be considered to have held the New
Notes from the time of their original acquisition of the Old Notes. As used
herein, the term "Senior Note" refers to both an Old Note and a New Note
received in exchange therefor.
INTEREST ON THE NEW NOTES
A holder of a New Note will be required to report as income for federal
income tax purposes interest earned on a New Note in accordance with the
holder's method of tax accounting. A holder of a New Note using the accrual
method of accounting for tax purposes is, as a general rule, required to
include interest in ordinary income as such interest accrues. A cash basis
holder must include interest in income when cash payments are received by (or
made available to) such holder.
MARKET DISCOUNT
If a holder acquired an Old Note at a market discount (i.e., at a price less
than the stated redemption price at maturity of the Old Note), the Old Note is
subject to the market discount rules of the Code unless the market discount is
de minimis. Market discount is de minimis if it is less than one quarter of
one percent of the principal amount of the Old Note multiplied by the number
of complete years to maturity after the holder acquired the Old Note. If the
holder exchanges an Old Note that has more than de minimis market discount for
a New Note, the New Note also will be subject to the market discount rules of
the Code. New Notes purchased by a
47
<PAGE>
subsequent purchaser also will be subject to the market discount rules if the
New Notes are purchased with more than a de minimis amount of market discount.
Notes that have more than de minimis market discount are herein referred to as
"Market Discount Notes."
Any gain recognized on the maturity or disposition of a Market Discount Note
will be treated as ordinary income to the extent that such gain does not
exceed the accrued market discount on the Market Discount Note. Alternatively,
a holder may elect to include market discount in income currently over the
life of the Market Discount Note. Such an election shall apply to all debt
instruments with market discount acquired by the holder on or after the first
day of the first taxable year to which the election applies. This election may
not be revoked without the consent of the IRS.
Market discount will accrue on a straight-line basis unless the holder
elects to accrue market discount on a constant yield to maturity basis. Such
an election shall apply only to the Market Discount Note with respect to which
it is made and may not be revoked without the consent of the IRS. A holder who
does not elect to include market discount in income currently generally will
be required to defer deductions for interest on borrowings allocable to a
Market Discount Note in an amount not exceeding the accrued market discount on
the Market Discount Note until the maturity or disposition of the Market
Discount Note.
AMORTIZABLE BOND PREMIUM
A holder that purchased an Old Note for an amount in excess of its principal
amount may elect to treat such excess as "amortizable bond premium," in which
case the amount required to be included in the holder's income each year with
respect to interest on the Old Note will be reduced by the amount of
amortizable bond premium allocable (based on the yield to maturity of the Old
Note) to such year. If a holder made an election to amortize bond premium with
respect to an Old Note and exchanges the Old Note for a New Note pursuant to
the Exchange Offer, the election will apply to the New Note. A holder who
exchanges an Old Note for which an election has not been made for a New Note,
and a subsequent purchaser of a New Note, may also elect to amortize bond
premium if the holder acquired the Note for an amount in excess of its
principal amount. Any election to amortize bond premium shall apply to all
bonds (other than bonds the interest on which is excludable from gross income)
held by the holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the holder, and is irrevocable
without the consent of the IRS.
DISPOSITION OF THE NOTES
Subject to the market discount rules discussed above, a holder of Senior
Notes will recognize gain or loss upon the sale, redemption, retirement or
other disposition of such securities equal to the difference between (i) the
amount of cash and the fair market value of the property received (except to
the extent attributable to the payment of accrued interest) and (ii) the
holder's adjusted tax basis in the securities. Gain or loss recognized will be
capital gain or loss provided the Notes are held as capital assets by the
holder, and will be long-term capital gain or loss if the holder has held such
securities (or is treated as having held such securities) for more than one
year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Holders of the Senior Notes may be subject to backup withholding at a rate
of 31% with respect to interest paid on the Senior Notes unless such holder
(a) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with the requirements of the backup
withholding rules.
The Company will report to the holders of the Senior Notes and the IRS the
amount of any "reportable payment" for each calendar year and amount of tax
withheld, if any, with respect to payments on the Senior Notes.
48
<PAGE>
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO IT OF THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE
SENIOR NOTES (INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN,
AND OTHER TAX LAWS).
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of the New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes
acquired as a result of market-making activities or other trading activities.
The Company has agreed that it will make this Prospectus available to any
broker-dealer for use in connection with any such resale for a period of 365
days after the Expiration Date or until all participating broker-dealers have
so resold.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concession from any
such broker-dealer and/or the purchasers of any New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant
to the Exchange Offer and any broker-dealer that participates in a
distribution of New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any resale of New Notes and
any commissions or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
The Company has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer, and
to the best of the Company's information and belief, each person participating
in the Exchange Offer is acquiring the New Notes in its ordinary course of
business and has no arrangement or understanding with any person to
participate in the distribution of the New Notes to be received in the
Exchange Offer.
LEGAL MATTERS
The validity of the New Notes will be passed upon on behalf of the Company
by Buchanan Ingersoll Professional Corporation, Pittsburgh, Pennsylvania.
EXPERTS
The consolidated financial statements and the related financial statement
schedules of Adelphia and its subsidiaries as of March 31, 1996 and 1997, and
for each of the three years in the period ended March 31, 1997, and the
consolidated financial statements of Olympus Communications, L.P. and its
subsidiaries as of December 31, 1995 and 1996, and for each of the three years
in the period ended December 31, 1996 incorporated in this Prospectus by
reference from Adelphia's Annual Report on Form 10-K for the year ended March
31, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
49
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING
LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE REGISTRANT. NEI-
THER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE REGISTRANT SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANY-
ING LETTER OF TRANSMITTAL CONSTITUTES AN OFFER OR SOLICITATION BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO
OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 3
Incorporation by Reference................................................. 3
Prospectus Summary......................................................... 5
The Exchange Offer......................................................... 8
Summary Description of Senior Notes ....................................... 10
Risk Factors............................................................... 12
The Exchange Offer......................................................... 17
Use of Proceeds............................................................ 25
Capitalization............................................................. 26
Selected Consolidated Financial Data....................................... 27
Description of Senior Notes................................................ 30
Certain Federal Income Tax Considerations.................................. 47
Plan of Distribution....................................................... 49
Legal Matters.............................................................. 49
Experts.................................................................... 49
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ADELPHIA
COMMUNICATIONS
CORPORATION
9 7/8% SERIES B SENIOR NOTES
DUE 2007
----------------
PROSPECTUS
----------------
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in general that
a corporation may indemnify its directors, officers, employees or agents
against expenditures (including judgments, fines, amounts paid in settlement
and attorneys' fees) made by them in connection with certain lawsuits to which
they may be made parties by reason of their being directors, officers,
employees or agents and shall so indemnify such persons against expenses
(including attorneys' fees) if they have been successful on the merits or
otherwise. The bylaws of Adelphia provide for indemnification of the officers
and directors of Adelphia to the full extent permissible under Delaware law.
Adelphia's Certificate of Incorporation also provides, pursuant to Section
102(b)(7) of the Delaware General Corporation Law, that directors of Adelphia
shall not be personally liable to Adelphia, respectively, or its stockholders
for monetary damages for breach of fiduciary duty as a director for acts or
omissions, provided that directors shall nonetheless be liable for breaches of
the duty of loyalty, bad faith, intentional misconduct, knowing violations of
law, unlawful distributions to stockholders, or transactions from which a
director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
3.01 Certificate of Incorporation of Adelphia Communications
Corporation (Incorporated herein by reference is Exhibit 3.01 to
the Registrant's Current Report on Form 8-K dated July 24, 1997.)
(File Number 0-16014)
3.02 Bylaws of Adelphia Communications Corporation (Incorporated herein
by reference is Exhibit 3.02 to Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1994.) (File Number 0-
16014)
4.01 Indenture, dated as of February 26, 1997, between the Registrant
and Bank of Montreal Trust Company with respect to the
Registrant's 9 7/8% Senior Notes Due 2007 (Incorporated herein by
reference is Exhibit 4.01 to Registrant's Current Report on Form
8-K dated May 1, 1997.) (File Number 0-16014)
4.02 Form of Note with respect to the Registrant's 9 7/8% Senior Notes
Due 2007 (contained in Indenture filed as Exhibit 4.01.)
4.03 Registration Rights Agreement, dated as of February 26, 1997,
between the Registrant and the Initial Purchaser with respect to
the Registrant's 9 7/8% Senior Notes Due 2007 (Incorporated herein
by reference is Exhibit 10.01 to Registrant's Current Report on
Form 8-K dated May 1, 1997.) (File Number 0-16014)
4.04 First Supplemental Indenture, dated as of May 4, 1994, with
respect to Registrant's 9 1/2% Senior Pay-In-Kind Notes Due 2004
(Incorporated herein by reference is Exhibit 4.01 to Registrant's
Current Report on Form 8-K dated May 5, 1994.) (File Number 0-
16014)
4.05 Indenture, dated as of February 22, 1994, with respect to
Registrant's 9 1/2% Senior Pay-In-Kind Notes Due 2004
(Incorporated herein by reference is Exhibit 4.05 to Registration
Statement No. 33-52513 on Form S-4.)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.06 Indenture, dated as of July 28, 1993, with respect to Registrant's
10 1/4% Senior Notes Due 2000 (Incorporated herein by reference is
Exhibit 4.01 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.) (File Number 0-16014)
4.07 Amended and Restated Indenture, dated as of May 11, 1993, with
respect to Registrant's 9 7/8% Senior Debentures Due 2005
(Incorporated herein by reference is Exhibit 4.01 to Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31,
1993.) (File Number 0-16014)
4.08 Indenture, dated as of September 2, 1992, with respect to the
Registrant's 11 7/8% Senior Debentures Due 2004 (Incorporated
herein by reference is Exhibit 4.03 to Registration Statement No.
33-52630 on Form S-1.)
4.09 Indenture, dated as of May 7, 1992, with respect to the
Registrant's 12 1/2% Senior Notes Due 2002 (Incorporated herein by
reference is Exhibit 4.03 to Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1992.) (File Number 0-
16014)
4.10 Indenture, dated as of April 15, 1996, between Hyperion
Telecommunications, Inc. and Bank of Montreal Trust Company
(Incorporated by reference is Exhibit 4.1 to Registration
Statement No. 333-06957 on Form S-4 filed for Hyperion
Telecommunications, Inc.)
4.11 Form of 13% Hyperion Telecommunications, Inc. Senior Discount
Notes (Incorporated herein by reference is Exhibit 4.3 to Hyperion
Telecommunications, Inc.'s Registration Statement No. 333- 12619
on Form S-1.)
4.12 First Supplemental Indenture, dated as of September 11, 1996,
between Hyperion Telecommunications, Inc. and Bank of Montreal
Trust Company (Incorporated herein be reference is Exhibit 4.2 of
Hyperion Telecommunications, Inc.'s Registration Statement No.
333-12619 on Form S-1.)
4.13 Indenture, dated as of November 12, 1996, between Olympus
Communications, L.P., Olympus Capital Corporation and Bank of
Montreal Trust Company (Incorporated herein by reference is
Exhibit 10.02 to Registrant's Current Report on Form 8-K dated
December 16, 1996.) (File Number 0-16014)
4.14 Certificate of Designations for 13% Series A and Series B
Cumulative Exchangeable Preferred Stock (Contained in Exhibit 3.01
to Registrant's Current Report on Form 8-K dated July 24, 1997
which is incorporated herein by reference.) (File Number 0-16014)
4.15 Certificate of Designations for Series C Convertible Preferred
Stock (Contained in Exhibit 3.01 to Registrant's Current Report on
Form 8-K dated July 24, 1997 which is incorporated herein by
reference.) (File Number 0-16014)
4.16 Indenture, dated as of July 7, 1997, with respect to the
Registrant's 10 1/2% Senior Notes due 2004, between the Registrant
and the Bank of Montreal Trust Company (Incorporated herein by
reference is Exhibit 4.03 from the Registrant's Current Report on
Form 8-K dated July 24, 1997) (File Number 0-16014)
4.17 Form of 10 1/2% Senior Note due 2004 (Contained in Exhibit 4.03 to
Registrant's Current Report on Form 8-K dated July 24, 1997 which
is incorporated herein by reference.) (File Number 0-16014)
4.18 Form of Indenture, with respect to the Registrant's 13% Senior
Subordinated Exchange Debentures due 2009, between the Registrant
and the Bank of Montreal Trust Company (Contained in Exhibit 3.01
as Annex A to Registrant's Current Report on Form 8-K dated July
24, 1997 which is incorporated herein by reference.) (File Number
0-16014)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.19 Form of Certificate for 13% Cumulative Exchangeable Preferred
Stock (Incorporated herein by reference is Exhibit 4.06 from the
Registrant's Current Report on Form 8-K dated July 24, 1997) (File
Number 0-16014)
4.20 Form of Certificate for Series C Convertible Preferred Stock
(Incorporated herein by reference is Exhibit 4.06 from the
Registrant's Current Report on Form 8-K dated July 24, 1997) (File
Number 0-16014)
5.01** Opinion of Buchanan Ingersoll Professional Corporation
10.01 Class B Common Stockholders Agreement (Incorporated herein by
reference is Exhibit 10.01 to Registration Statement No. 33-6974
on Form S-1.)
10.02 Joinder to Class B Common Stockholders Agreement (Incorporated
herein by reference is Exhibit 10.02 to Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994.) (File
Number 0-16014)
10.03 Registration Rights Agreement and Amendment to Registration Rights
Agreement (Incorporated herein by reference are Exhibit 10.02 to
Registration Statement No. 33-6974 on Form S-1 and Exhibit 10.35
to Registration Statement No. 33-25121 on Form S-1.)
10.04 Form of Management Agreement for Managed Companies (Incorporated
herein by reference is Exhibit 10.04 to the Registrant's Annual
Report on Form 10-K for fiscal year ended March 31, 1996.) (File
Number 0-16014)
10.05 Management Agreement--Montgomery Cablevision Associates, L.P.
(Incorporated herein by reference is Exhibit 10.08 to Registration
Statement No. 33-6974 on Form S-1.)
10.06 Management Agreement--Adelphia Cablevision Associates of Radnor,
L.P. (Incorporated herein by reference is Exhibit 10.09 to
Registration Statement No. 33-6974 on Form S-1.)
10.07 Stock Option Plan of 1986, as amended (Incorporated herein by
reference is Exhibit 10.07 to Registration Statement No. 33-46551
on Form S-1.)
10.08 Restricted Stock Bonus Plan, as amended (Incorporated herein by
reference is Exhibit 10.08 to Registration Statement No. 33-46551
on Form S-1.)
10.09 Business Opportunity Agreement (Incorporated herein by reference
is Exhibit 10.13 to Registration Statement No. 33-3674 on Form S-
1.)
10.10 Employment Agreement between the Company and John J. Rigas
(Incorporated herein by reference is Exhibit 10.14 to Registration
Statement No. 33-6974 on Form S-1.)
10.11 Employment Agreement between the Company and Daniel R. Milliard
(Incorporated herein by reference is Exhibit 10.15 to Registration
Statement No. 33-6974 on Form S-1.)
10.12 Employment Agreement between the Company and Timothy J. Rigas
(Incorporated herein by reference is Exhibit 10.16 to Registration
Statement No. 33-6974 on Form S-1.)
10.13 Employment Agreement between the Company and Michael J. Rigas
(Incorporated herein by reference is Exhibit 10.17 to Registration
Statement No. 33-6974 on Form S-1.)
10.14 Employment Agreement between the Company and James P. Rigas
(Incorporated herein by reference is Exhibit 10.18 to Registration
Statement No. 33-6974 on Form S-1.)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.15 Agreement Regarding Management Fees relating to the subsidiaries
of Chauncey Communications Corporation (Incorporated herein by
reference is Exhibit 10.16 of Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1991.) (File Number 0-
16014)
10.16 Form of Note Agreement, dated as of August 1, 1990, relating to
the 10.66% Senior Secured Notes due August 1, 1998 of Chauncey
Communications Corporation (Incorporated herein by reference is
Exhibit 10.01 of Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990.) (File Number 0-16014)
10.17 Amendatory Agreement regarding Chauncey Communications Corporation
10.66% Senior Secured Note Agreement, dated as of August 6, 1991
(Incorporated herein by reference is Exhibit 10.02 of Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1991.) (File Number 0-16014)
10.18 $50,000 Term Note and Pledge Agreement between Adelphia
Communications Corporation as lender and Daniel R. Milliard, dated
October 1, 1988 (Incorporated herein by reference is Exhibit 10.03
of Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991.) (File Number 0-16014)
10.19 $205,000 Revolving Term Note and Pledge Agreement among Adelphia
Communications Corporation as lender, Daniel R. Milliard and David
Acker (Incorporated herein by reference is Exhibit 10.04 of
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991.) (File Number 0-16014)
10.20 Olympus Communications, L.P. Second Amended and Restated Limited
Partnership Agreement, dated as of February 28, 1995 (Incorporated
herein by reference is Exhibit 10.32 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.)
(File Number 0-16014)
10.21 Credit, Security and Guaranty Agreement among UCA Corp. and
certain of its Affiliates and First Union National Bank of North
Carolina as Administrative Agent, dated as of March 15, 1995
(Incorporated herein by reference is Exhibit 10.32 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995.) (File Number 0-16014)
10.22 Revolving Credit Facility among Adelphia Cable partners, L.P.,
Southwest Florida Cable, Inc., West Boca Acquisition Limited
Partnership and Toronto-Dominion (Texas), Inc., as Administrative
Agent, dated May 12, 1995 (Incorporated herein by reference is
Exhibit 10.03 to Registrant's Current Report on Form 8-K dated
June 30, 1995.) (File Number 0-16014)
10.23 Credit Agreement, dated as of October 27, 1995, among Plato
Communications, Inc. Northeast Cable, Inc., Robinson/Plum
Cablevision L.P., the several other banks and other financial
institutions from time to time parties to this agreement and
Chemical Bank, as Administrative Agent (Incorporated herein by
reference is Exhibit 10.35 to Registrant's Current Report on Form
8-K dated December 7, 1995.) (File Number 0-16014)
10.24 Credit Agreement, dated as of April 12, 1996, among Chelsea
Communications, Inc., Kittanning Cablevision Inc., Robinson/Plum
Cablevision L.P., the several banks and financial institutions
parties thereto, and Toronto Dominion (Texas), Inc. as
Administrative Agent (Incorporated herein by reference is Exhibit
10.36 to Registrant's Current Report on Form 8-K dated June 3,
1996.) (File Number 0-16014)
10.25 Amended Credit Agreement, dated as of March 29, 1996, among
Highland Video Associates L.P., Telesat Acquisition Limited
Partnership, Global Acquisition Partners, L.P., the various
financial institutions as parties thereto, Bank of Montreal as
syndication agent, Chemical Bank as documentation agent, and the
Bank of Nova Scotia as administrative agent (Incorporated herein
by reference is Exhibit 10.37 to Registrant's Current Report on
Form 8-K dated June 19, 1996.) (File Number 0-16014)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.26 Purchase Agreement dated as of April 10, 1996 between Hyperion
Telecommunications, Inc. and Bear Stearns & Co. Inc., Chase
Securities Inc. and NationsBanc Capital Markets, Inc.
(Incorporated by reference is Exhibit 1.1 to Registration
Statement No. 333-06957 on Form S-4 filed for Hyperion
Telecommunications, Inc.)
10.27 Purchase Agreement dated as of February 21, 1997 between the
Registrant and Smith Barney Inc. (Incorporated herein by reference
is Exhibit 10.02 to Adelphia Communications Corporation's Current
Report on Form 8-K dated May 1, 1997). (File Number 0-16014)
10.28 Registration Rights Agreement dated as of April 15, 1996, between
Hyperion Telecommunications, Inc. and the Initial Purchasers
(Incorporated by reference is Exhibit 4.3 to Registration
Statement No. 333-06957 on Form S-4 filed for Hyperion
Telecommunications, Inc.)
10.29 Warrant Agreement dated as of April 15, 1996, by and among
Hyperion Telecommunications, Inc. and Bank of Montreal Trust
Company (Incorporated by reference is Exhibit 10.13 to
Registration Statement No. 333-06957 on Form S-4 filed for
Hyperion Telecommunications, Inc.)
10.30 Warrant Registration Rights Agreement dated as of April 15, 1996,
by and among Hyperion Telecommunications, Inc. and the Initial
Purchasers (Incorporated by reference is Exhibit 10.14 to
Registration Statement No. 333-06957 on Form S-4 filed for
Hyperion Telecommunications, Inc.)
10.31 Hyperion Telecommunications, Inc. Long-Term Incentive Compensation
Plan (Incorporated herein by reference is Exhibit 10.17 to
Hyperion Telecommunications, Inc.'s Registration Statement No.
333-13663 on Form S-1.)
10.32 Purchase Agreement, dated as of November 6, 1996, between Olympus
Communications, L.P., Olympus Capital Corporation and Goldman,
Sachs & Co. (Incorporated herein by reference is Exhibit 10.01 to
Registrant's Current Report on Form 8-K dated December 16, 1996.)
(File Number 0-16014)
10.33 Registration Rights Agreement among Charles R. Drenning, Paul D.
Fajerski, Randolph S. Fowler, Adelphia Communications Corporation
and the Company (Incorporated herein by reference is Exhibit 10.18
to Hyperion Telecommunications, Inc.'s Registration Statement No.
333-13663 on Form S-1.)
10.34 Registration Rights Agreement between Adelphia Communications
Corporation and the Company (Incorporated herein by reference is
Exhibit 10.19 to Hyperion Telecommunications, Inc.'s Registration
Statement No. 333-13663 on Form S-1.)
10.35 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated September 1,
1995 (Incorporated herein by reference is Exhibit 10.33 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 1996.) (File Number 0-16014)
10.36 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated March 29, 1996
(Incorporated herein by reference is Exhibit 10.34 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 1996.) (File Number 0-16014)
10.37 Second Amendment to the Olympus Communications, L.P. Second
Amended and Restated Limited Partnership Agreement, dated June 27,
1996 (Incorporated herein by reference is Exhibit 10.35 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 1996.) (File Number 0-16014)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.38 Employment Agreement between Hyperion Telecommunications, Inc. and
Daniel R. Milliard dated as of March 4, 1997 (Incorporated herein
by reference is Exhibit 10.03 to Adelphia Communications
Corporation's Current Report on Form 8-K dated May 1, 1997) (File
Number 0-16014)
10.39 Extension Agreement dated as of January 8, 1997, among Hyperion
Telecommunications, Inc., Adelphia Communications Corporation,
Charles R. Drenning, Paul D. Fajerski, Randolph S. Fowler, and six
Trusts named therein (Incorporated herein by reference is Exhibit
10.04 to Adelphia Communications Corporation's Current Report on
Form 8-K dated May 1, 1997) (File Number 0-16014)
10.40 Purchase Agreement among Adelphia Communications Corporation,
Smith Barney Inc., Bear Stearns & Co. Inc., NationsBanc Capital
Markets, Inc. and TD Securities (USA) Inc. (the "Initial
Purchasers") dated July 1, 1997 (Incorporated herein by reference
is Exhibit 10.01 from the Registrant's Current Report on Form 8-K
dated July 24, 1997) (File Number 0-16014)
10.41 Registration Rights Agreement among Adelphia Communications
Corporation, the Initial Purchasers and Highland Holdings, dated
July 7, 1997, regarding the 13% Cumulative Exchangeable Preferred
Stock (Incorporated herein by reference is Exhibit 10.02 from the
Registrant's Current Report on Form 8-K dated July 24, 1997) (File
Number 0-16014)
10.42 Registration Rights Agreement among Adelphia Communications
Corporation and the Initial Purchasers, dated July 7, 1997,
regarding the 10 1/2% Senior Notes due 2004 (Incorporated herein
by reference is Exhibit 10.03 from the Registrant's Current Report
on Form 8-K dated July 24, 1997) (File Number 0-16014)
10.43 Registration Rights Agreement among Adelphia Communications
Corporation, Highland Holdings and Telesat Cablevision, Inc.,
dated July 7, 1997 (Incorporated herein by reference is Exhibit
10.04 from the Registrant's Current Report on Form 8-K dated July
24, 1997) (File Number 0-16014)
10.44 Purchase Agreement between Adelphia and Highland Holdings, dated
July 1, 1997 (Incorporated herein by reference is Exhibit 10.05
from the Registrant's Current Report on Form 8-K dated July 24,
1997) (File Number 0-16014)
10.45 Series C Preferred Stock Purchase Agreement among Adelphia
Communications Corporation, Highland Holdings and Telesat
Cablevision, Inc., dated June 22, 1997 (Incorporated herein by
reference is Exhibit 10.06 from the Registrant's Current Report on
Form 8-K dated July 24, 1997) (File Number 0-16014)
12.1* Computation of Ratio of Earnings to Fixed Charges
21.01 Subsidiaries of the Registrant (Incorporated herein by reference
is Exhibit 21.01 to Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1997.) (File Number 0-16014)
23.01** Consent of Buchanan Ingersoll Professional Corporation (contained
in its opinion filed as Exhibit 5.01 hereto)
23.02* Consent of Deloitte & Touche LLP
24.01** Power of Attorney (appearing on signature page)
25.01** Form T-1 Statement of Eligibility of Trustee
99.01** Form of Letter of Transmittal and Notice of Guaranteed Delivery
</TABLE>
- --------
*Filed herewith.
**Previously filed.
II-6
<PAGE>
(b) Financial Statement Schedules
The following schedules are included in the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31, 1997 contained herein by
reference.
Schedule I--Condensed Financial Information of the Registrant
Schedule II--Valuation and Qualifying Accounts
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes to respond to requests for information that
is incorporated by reference into the Prospectus pursuant to Item 4, 10(b), 11,
or 13 of the Form S-4, within one business day of receipt of such request, and
to send the incorporated documents by first-class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
The registrant undertakes that every prospectus (i) that is filed pursuant to
the paragraph immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of a Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be
deemed part of the Registration Statement as of the time it was
declared effective.
II-7
<PAGE>
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at such
time shall be deemed to be the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) ((S)230.424(b) of this chapter), if, in
the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (3)(i) and (3)(ii) above do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(6) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Coudersport, Commonwealth of Pennsylvania, on the 31st day of July, 1997.
ADELPHIA COMMUNICATIONS CORPORATION
By:/s/ Timothy J. Rigas
----------------------------------
Timothy J. Rigas
Executive Vice President, Chief
Accounting
Officer, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
SIGNATURE TITLE DATE
Chairman, President and
* Chief Executive Officer July 31, 1997
- -----------------------------
John Rigas
Executive Vice President and
* Director July 31, 1997
- -----------------------------
Michael J. Rigas
/s/ Timothy J. Rigas Executive Vice President,
- ----------------------------- Chief Accounting Officer, July 31, 1997
Timothy J. Rigas Treasurer, Chief Financial
Officer and Director
Executive Vice President and
* Director July 31, 1997
- -----------------------------
James P. Rigas
Senior Vice President,
* Secretary and Director July 31, 1997
- -----------------------------
Daniel R. Milliard
II-9
<PAGE>
SIGNATURE TITLE DATE
Director
* July 31, 1997
- -----------------------------
Dennis P. Coyle
Director
* July 31, 1997
- -----------------------------
Pete J. Metros
Director
* July 31, 1997
- -----------------------------
Perry S. Patterson
* /s/ Timothy J. Rigas July 31, 1997
- -----------------------------
Timothy J. Rigas, as
Attorney-in-Fact
II-10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
3.01 Certificate of Incorporation of Adelphia Communications
Corporation (Incorporated herein by reference is Exhibit 3.01 to
the Registrant's Current Report on Form 8-K dated July 24, 1997.)
(File Number 0-16014)
3.02 Bylaws of Adelphia Communications Corporation (Incorporated herein
by reference is Exhibit 3.02 to Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1994.) (File Number 0-
16014)
4.01 Indenture, dated as of February 26, 1997, between the Registrant
and Bank of Montreal Trust Company with respect to the
Registrant's 9 7/8% Senior Notes Due 2007 (Incorporated herein by
reference is Exhibit 4.01 to Registrant's Current Report on Form
8-K dated May 1, 1997.) (File Number 0-16014)
4.02 Form of Note with respect to the Registrant's 9 7/8% Senior Notes
Due 2007 (contained in Indenture filed as Exhibit 4.01.)
4.03 Registration Rights Agreement, dated as of February 26, 1997,
between the Registrant and the Initial Purchaser with respect to
the Registrant's 9 7/8% Senior Notes Due 2007 (Incorporated herein
by reference is Exhibit 10.01 to Registrant's Current Report on
Form 8-K dated May 1, 1997.) (File Number 0-16014)
4.04 First Supplemental Indenture, dated as of May 4, 1994, with
respect to Registrant's 9 1/2% Senior Pay-In-Kind Notes Due 2004
(Incorporated herein by reference is Exhibit 4.01 to Registrant's
Current Report on Form 8-K dated May 5, 1994.) (File Number 0-
16014)
4.05 Indenture, dated as of February 22, 1994, with respect to
Registrant's 9 1/2% Senior Pay-In-Kind Notes Due 2004
(Incorporated herein by reference is Exhibit 4.05 to Registration
Statement No. 33-52513 on Form S-4.)
4.06 Indenture, dated as of July 28, 1993, with respect to Registrant's
10 1/4% Senior Notes Due 2000 (Incorporated herein by reference is
Exhibit 4.01 to Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.) (File Number 0-16014)
4.07 Amended and Restated Indenture, dated as of May 11, 1993, with
respect to Registrant's 9 7/8% Senior Debentures Due 2005
(Incorporated herein by reference is Exhibit 4.01 to Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31,
1993.) (File Number 0-16014)
4.08 Indenture, dated as of September 2, 1992, with respect to the
Registrant's 11 7/8% Senior Debentures Due 2004 (Incorporated
herein by reference is Exhibit 4.03 to Registration Statement No.
33-52630 on Form S-1.)
4.09 Indenture, dated as of May 7, 1992, with respect to the
Registrant's 12 1/2% Senior Notes Due 2002 (Incorporated herein by
reference is Exhibit 4.03 to Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1992.) (File Number 0-
16014)
4.10 Indenture, dated as of April 15, 1996, between Hyperion
Telecommunications, Inc. and Bank of Montreal Trust Company
(Incorporated by reference is Exhibit 4.1 to Registration
Statement No. 333-06957 on Form S-4 filed for Hyperion
Telecommunications, Inc.)
4.11 Form of 13% Hyperion Telecommunications, Inc. Senior Discount
Notes (Incorporated herein by reference is Exhibit 4.3 to Hyperion
Telecommunications, Inc.'s Registration Statement No. 333-12619
on Form S-1.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
4.12 First Supplemental Indenture, dated as of September 11, 1996,
between Hyperion Telecommunications, Inc. and Bank of Montreal
Trust Company (Incorporated herein be reference is Exhibit 4.2 of
Hyperion Telecommunications, Inc.'s Registration Statement No.
333-12619 on Form S-1.)
4.13 Indenture, dated as of November 12, 1996, between Olympus
Communications, L.P., Olympus Capital Corporation and Bank of
Montreal Trust Company (Incorporated herein by reference is
Exhibit 10.02 to Registrant's Current Report on Form 8-K dated
December 16, 1996.) (File Number 0-16014)
4.14 Certificate of Designations for 13% Series A and Series B
Cumulative Exchangeable Preferred Stock (Contained in Exhibit 3.01
to Registrant's Current Report on Form 8-K dated July 24, 1997
which is incorporated herein by reference.) (File Number 0-16014)
4.15 Certificate of Designations for Series C Convertible Preferred
Stock (Contained in Exhibit 3.01 to Registrant's Current Report on
Form 8-K dated July 24, 1997 which is incorporated herein by
reference.) (File Number 0-16014)
4.16 Indenture, dated as of July 7, 1997, with respect to the
Registrant's 10 1/2% Senior Notes due 2004, between the Registrant
and the Bank of Montreal Trust Company (Incorporated herein by
reference is Exhibit 4.03 from the Registrant's Current Report on
Form 8-K dated July 24, 1997) (File Number 0-16014)
4.17 Form of 10 1/2% Senior Note due 2004 (Contained in Exhibit 4.03 to
Registrant's Current Report on Form 8-K dated July 24, 1997 which
is incorporated herein by reference.) (File Number 0-16014)
4.18 Form of Indenture, with respect to the Registrant's 13% Senior
Subordinated Exchange Debentures due 2009, between the Registrant
and the Bank of Montreal Trust Company (Contained in Exhibit 3.01
as Annex A to Registrant's Current Report on Form 8-K dated July
24, 1997 which is incorporated herein by reference.) (File Number
0-16014)
4.19 Form of Certificate for 13% Cumulative Exchangeable Preferred
Stock (Incorporated herein by reference is Exhibit 4.06 from the
Registrant's Current Report on Form 8-K dated July 24, 1997) (File
Number 0-16014)
4.20 Form of Certificate for Series C Convertible Preferred Stock
(Incorporated herein by reference is Exhibit 4.06 from the
Registrant's Current Report on Form 8-K dated July 24, 1997) (File
Number 0-16014)
5.01** Opinion of Buchanan Ingersoll Professional Corporation
10.01 Class B Common Stockholders Agreement (Incorporated herein by
reference is Exhibit 10.01 to Registration Statement No. 33-6974
on Form S-1.)
10.02 Joinder to Class B Common Stockholders Agreement (Incorporated
herein by reference is Exhibit 10.02 to Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994.) (File
Number 0-16014)
10.03 Registration Rights Agreement and Amendment to Registration Rights
Agreement (Incorporated herein by reference are Exhibit 10.02 to
Registration Statement No. 33-6974 on Form S-1 and Exhibit 10.35
to Registration Statement No. 33-25121 on Form S-1.)
10.04 Form of Management Agreement for Managed Companies (Incorporated
herein by reference is Exhibit 10.04 to the Registrant's Annual
Report on Form 10-K for fiscal year ended March 31, 1996.) (File
Number 0-16014)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.05 Management Agreement--Montgomery Cablevision Associates, L.P.
(Incorporated herein by reference is Exhibit 10.08 to Registration
Statement No. 33-6974 on Form S-1.)
10.06 Management Agreement--Adelphia Cablevision Associates of Radnor,
L.P. (Incorporated herein by reference is Exhibit 10.09 to
Registration Statement No. 33-6974 on Form S-1.)
10.07 Stock Option Plan of 1986, as amended (Incorporated herein by
reference is Exhibit 10.07 to Registration Statement No. 33-46551
on Form S-1.)
10.08 Restricted Stock Bonus Plan, as amended (Incorporated herein by
reference is Exhibit 10.08 to Registration Statement No. 33-46551
on Form S-1.)
10.09 Business Opportunity Agreement (Incorporated herein by reference
is Exhibit 10.13 to Registration Statement No. 33-3674 on Form S-
1.)
10.10 Employment Agreement between the Company and John J. Rigas
(Incorporated herein by reference is Exhibit 10.14 to Registration
Statement No. 33-6974 on Form S-1.)
10.11 Employment Agreement between the Company and Daniel R. Milliard
(Incorporated herein by reference is Exhibit 10.15 to Registration
Statement No. 33-6974 on Form S-1.)
10.12 Employment Agreement between the Company and Timothy J. Rigas
(Incorporated herein by reference is Exhibit 10.16 to Registration
Statement No. 33-6974 on Form S-1.)
10.13 Employment Agreement between the Company and Michael J. Rigas
(Incorporated herein by reference is Exhibit 10.17 to Registration
Statement No. 33-6974 on Form S-1.)
10.14 Employment Agreement between the Company and James P. Rigas
(Incorporated herein by reference is Exhibit 10.18 to Registration
Statement No. 33-6974 on Form S-1.)
10.15 Agreement Regarding Management Fees relating to the subsidiaries
of Chauncey Communications Corporation (Incorporated herein by
reference is Exhibit 10.16 of Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1991.) (File Number 0-
16014)
10.16 Form of Note Agreement, dated as of August 1, 1990, relating to
the 10.66% Senior Secured Notes due August 1, 1998 of Chauncey
Communications Corporation (Incorporated herein by reference is
Exhibit 10.01 of Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990.) (File Number 0-16014)
10.17 Amendatory Agreement regarding Chauncey Communications Corporation
10.66% Senior Secured Note Agreement, dated as of August 6, 1991
(Incorporated herein by reference is Exhibit 10.02 of Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1991.) (File Number 0-16014)
10.18 $50,000 Term Note and Pledge Agreement between Adelphia
Communications Corporation as lender and Daniel R. Milliard, dated
October 1, 1988 (Incorporated herein by reference is Exhibit 10.03
of Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991.) (File Number 0-16014)
10.19 $205,000 Revolving Term Note and Pledge Agreement among Adelphia
Communications Corporation as lender, Daniel R. Milliard and David
Acker (Incorporated herein by reference is Exhibit 10.04 of
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991.) (File Number 0-16014)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.20 Olympus Communications, L.P. Second Amended and Restated Limited
Partnership Agreement, dated as of February 28, 1995 (Incorporated
herein by reference is Exhibit 10.32 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.)
(File Number 0-16014)
10.21 Credit, Security and Guaranty Agreement among UCA Corp. and
certain of its Affiliates and First Union National Bank of North
Carolina as Administrative Agent, dated as of March 15, 1995
(Incorporated herein by reference is Exhibit 10.32 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995.) (File Number 0-16014)
10.22 Revolving Credit Facility among Adelphia Cable partners, L.P.,
Southwest Florida Cable, Inc., West Boca Acquisition Limited
Partnership and Toronto-Dominion (Texas), Inc., as Administrative
Agent, dated May 12, 1995 (Incorporated herein by reference is
Exhibit 10.03 to Registrant's Current Report on Form 8-K dated
June 30, 1995.) (File Number 0-16014)
10.23 Credit Agreement, dated as of October 27, 1995, among Plato
Communications, Inc. Northeast Cable, Inc., Robinson/Plum
Cablevision L.P., the several other banks and other financial
institutions from time to time parties to this agreement and
Chemical Bank, as Administrative Agent (Incorporated herein by
reference is Exhibit 10.35 to Registrant's Current Report on Form
8-K dated December 7, 1995.) (File Number 0-16014)
10.24 Credit Agreement, dated as of April 12, 1996, among Chelsea
Communications, Inc., Kittanning Cablevision Inc., Robinson/Plum
Cablevision L.P., the several banks and financial institutions
parties thereto, and Toronto Dominion (Texas), Inc. as
Administrative Agent (Incorporated herein by reference is Exhibit
10.36 to Registrant's Current Report on Form 8-K dated June 3,
1996.) (File Number 0-16014)
10.25 Amended Credit Agreement, dated as of March 29, 1996, among
Highland Video Associates L.P., Telesat Acquisition Limited
Partnership, Global Acquisition Partners, L.P., the various
financial institutions as parties thereto, Bank of Montreal as
syndication agent, Chemical Bank as documentation agent, and the
Bank of Nova Scotia as administrative agent (Incorporated herein
by reference is Exhibit 10.37 to Registrant's Current Report on
Form 8-K dated June 19, 1996.) (File Number 0-16014)
10.26 Purchase Agreement dated as of April 10, 1996 between Hyperion
Telecommunications, Inc. and Bear Stearns & Co. Inc., Chase
Securities Inc. and NationsBanc Capital Markets, Inc.
(Incorporated by reference is Exhibit 1.1 to Registration
Statement No. 333-06957 on Form S-4 filed for Hyperion
Telecommunications, Inc.)
10.27 Purchase Agreement dated as of February 21, 1997 between the
Registrant and Smith Barney Inc. (Incorporated herein by reference
is Exhibit 10.02 to Adelphia Communications Corporation's Current
Report on Form 8-K dated May 1, 1997). (File Number 0-16014)
10.28 Registration Rights Agreement dated as of April 15, 1996, between
Hyperion Telecommunications, Inc. and the Initial Purchasers
(Incorporated by reference is Exhibit 4.3 to Registration
Statement No. 333-06957 on Form S-4 filed for Hyperion
Telecommunications, Inc.)
10.29 Warrant Agreement dated as of April 15, 1996, by and among
Hyperion Telecommunications, Inc. and Bank of Montreal Trust
Company (Incorporated by reference is Exhibit 10.13 to
Registration Statement No. 333-06957 on Form S-4 filed for
Hyperion Telecommunications, Inc.)
10.30 Warrant Registration Rights Agreement dated as of April 15, 1996,
by and among Hyperion Telecommunications, Inc. and the Initial
Purchasers (Incorporated by reference is Exhibit 10.14 to
Registration Statement No. 333-06957 on Form S-4 filed for
Hyperion Telecommunications, Inc.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.31 Hyperion Telecommunications, Inc. Long-Term Incentive Compensation
Plan (Incorporated herein by reference is Exhibit 10.17 to
Hyperion Telecommunications, Inc.'s Registration Statement No.
333-13663 on Form S-1.)
10.32 Purchase Agreement, dated as of November 6, 1996, between Olympus
Communications, L.P., Olympus Capital Corporation and Goldman,
Sachs & Co. (Incorporated herein by reference is Exhibit 10.01 to
Registrant's Current Report on Form 8-K dated December 16, 1996.)
(File Number 0-16014)
10.33 Registration Rights Agreement among Charles R. Drenning, Paul D.
Fajerski, Randolph S. Fowler, Adelphia Communications Corporation
and the Company (Incorporated herein by reference is Exhibit 10.18
to Hyperion Telecommunications, Inc.'s Registration Statement No.
333-13663 on Form S-1.)
10.34 Registration Rights Agreement between Adelphia Communications
Corporation and the Company (Incorporated herein by reference is
Exhibit 10.19 to Hyperion Telecommunications, Inc.'s Registration
Statement No. 333-13663 on Form S-1.)
10.35 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated September 1,
1995 (Incorporated herein by reference is Exhibit 10.33 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 1996.) (File Number 0-16014)
10.36 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated March 29, 1996
(Incorporated herein by reference is Exhibit 10.34 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 1996.) (File Number 0-16014)
10.37 Second Amendment to the Olympus Communications, L.P. Second
Amended and Restated Limited Partnership Agreement, dated June 27,
1996 (Incorporated herein by reference is Exhibit 10.35 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 1996.) (File Number 0-16014)
10.38 Employment Agreement between Hyperion Telecommunications, Inc. and
Daniel R. Milliard dated as of March 4, 1997 (Incorporated herein
by reference is Exhibit 10.03 to Adelphia Communications
Corporation's Current Report on Form 8-K dated May 1, 1997) (File
Number 0-16014)
10.39 Extension Agreement dated as of January 8, 1997, among Hyperion
Telecommunications, Inc., Adelphia Communications Corporation,
Charles R. Drenning, Paul D. Fajerski, Randolph S. Fowler, and six
Trusts named therein (Incorporated herein by reference is Exhibit
10.04 to Adelphia Communications Corporation's Current Report on
Form 8-K dated May 1, 1997) (File Number 0-16014)
10.40 Purchase Agreement among Adelphia Communications Corporation,
Smith Barney Inc., Bear Stearns & Co. Inc., NationsBanc Capital
Markets, Inc. and TD Securities (USA) Inc. (the "Initial
Purchasers") dated July 1, 1997 (Incorporated herein by reference
is Exhibit 10.01 from the Registrant's Current Report on Form 8-K
dated July 24, 1997) (File Number 0-16014)
10.41 Registration Rights Agreement among Adelphia Communications
Corporation, the Initial Purchasers and Highland Holdings, dated
July 7, 1997, regarding the 13% Cumulative Exchangeable Preferred
Stock (Incorporated herein by reference is Exhibit 10.02 from the
Registrant's Current Report on Form 8-K dated July 24, 1997) (File
Number 0-16014)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.42 Registration Rights Agreement among Adelphia Communications
Corporation and the Initial Purchasers, dated July 7, 1997,
regarding the 10 1/2% Senior Notes due 2004 (Incorporated herein
by reference is Exhibit 10.03 from the Registrant's Current Report
on Form 8-K dated July 24, 1997) (File Number 0-16014)
10.43 Registration Rights Agreement among Adelphia Communications
Corporation, Highland Holdings and Telesat Cablevision, Inc.,
dated July 7, 1997 (Incorporated herein by reference is Exhibit
10.04 from the Registrant's Current Report on Form 8-K dated July
24, 1997) (File Number 0-16014)
10.44 Purchase Agreement between Adelphia and Highland Holdings, dated
July 1, 1997 (Incorporated herein by reference is Exhibit 10.05
from the Registrant's Current Report on Form 8-K dated July 24,
1997) (File Number 0-16014)
10.45 Series C Preferred Stock Purchase Agreement among Adelphia
Communications Corporation, Highland Holdings and Telesat
Cablevision, Inc., dated June 22, 1997 (Incorporated herein by
reference is Exhibit 10.06 from the Registrant's Current Report on
Form 8-K dated July 24, 1997) (File Number 0-16014)
12.1* Computation of Ratio of Earnings to Fixed Charges
21.01 Subsidiaries of the Registrant (Incorporated herein by reference
is Exhibit 21.01 to Registrant's Annual Report on Form 10-K for
the fiscal year ended March 31, 1997.) (File Number 0-16014)
23.01** Consent of Buchanan Ingersoll Professional Corporation (contained
in its opinion filed as Exhibit 5.01 hereto)
23.02* Consent of Deloitte & Touche LLP
24.01** Power of Attorney (appearing on signature page)
25.01** Form T-1 Statement of Eligibility of Trustee
99.01** Form of Letter of Transmittal and Notice of Guaranteed Delivery
</TABLE>
- --------
*Filed herewith.
**Previously filed.
<PAGE>
EXHIBIT 12.1
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Loss before Income Taxes,
Extraordinary Loss and
Cumulative Effect of
Change in Accounting
Principle.............. $(99,766) $(94,706) $(111,759) $(122,680) $(119,290)
Add: Fixed Charges,
Excluding Capitalized
Interest............... 170,376 187,439 200,927 217,170 249,113
Equity in loss of joint
ventures............... 46,841 30,054 44,349 46,257 59,169
-------- -------- --------- --------- ---------
Net Earnings Available for
Fixed Charges............ 117,451 122,787 133,517 140,747 188,992
-------- -------- --------- --------- ---------
Fixed Charges:
Interest expense........ 164,859 182,136 195,698 210,691 240,692
Capitalized interest.... 1,009 1,345 1,736 1,766 1,727
Amortization of debt
issuance costs......... 4,155 3,987 3,792 4,917 6,344
Interest portion of rent
expense................ 1,362 1,316 1,437 1,562 2,077
-------- -------- --------- --------- ---------
Total Fixed Charges....... 171,385 188,784 202,663 218,936 250,840
-------- -------- --------- --------- ---------
Ratio of Earnings to Fixed
Charges.................. -- -- -- -- --
Deficiency in Earnings
Required to Cover
Fixed Charges............ $ 53,934 $ 65,997 $ 69,146 $ 78,189 $ 61,848
======== ======== ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-26467 of Adelphia Communications Corporation on
Form S-4 of our report dated June 11, 1997 and our report dated March 26, 1997
on our audits of the financial statements of Adelphia Communications Corporation
and subsidiaries and of Olympus Communications, L.P. and subsidiaries,
respectively, appearing and incorporated by reference in the Annual Report on
Form 10-K of Adelphia Communications Corporation for the year ended March 31,
1997, and to the reference to us under the heading "Experts" in the Prospectus,
which is part of such Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
July 30, 1997
