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Adelphia Files Preliminary Financial Report with SEC

By Mark Scott

Coudersport, PA – Adelphia Communications Corporation announced Friday that it has filed a Form 8-K with the Securities and Exchange Commission (SEC), disclosing certain related-party transactions.

The 25-page report contains details of the financial ties between the Rigas family and publicly-held Adelphia. For example, the report confirms that Adelphia backed $150 million in debt incurred by the Buffalo Sabres hockey team owned separately by John Rigas. In addition, Adelphia spent $13 million to construct a golf course on land owned by John Rigas in Coudersport, PA.

"The operation of the Adelphia [cash-management system] results in the commingling of funds among the ... participants, which include company subsidiaries and Rigas entities," Adelphia said in the filing. "These transactions create numerous related party payables and receivables among the ... participants."

The company further stated it shouldn't be assumed that the transactions detailed in Adelphia's SEC filing were approved by the board or the independent directors. If they were, the firm said it shouldn't be assumed that approval "was based on accurate complete information."

Lawrence Mitchell, professor of securities law at George Washington University and a leading expert in corporate law, told the Buffalo News Saturday that this could lead to legal problems for the Rigas family. "There has to be some independent review" when corporations make deals with their top managers, he said.

The SEC continues its formal investigation of Adelphia. In addition, federal prosecutors in New York and Pennslyvania are conducting a probe.

John Rigas, and his sons Timothy, Michael and James, gave up their seats on the Adelphia board this week and agreed to transfer more than $1 billion in assets to Adelphia.

Adelphia stock closed up 15-cents Friday to $2.77 a share.