The Rigas family expects to pump an additional $150 million into Adelphia Communications Corp. through a purchase of super-voting stock as the cable television company raises funds from investors.
The family, who are the majority owners of Adelphia, will purchase 2.5 million "Class B" shares through an agreement between the company and John J. Rigas, chairman and chief executive, Adelphia announced Wednesday.
The deal is subject to a fairness opinion and approval by Adelphia's board.
The funds will go for general corporate purposes, which may include paying debt and the expansion of cable and telephone businesses, said Jake Kane, vice president for corporate development.
Adelphia's business telephone subsidiary announced an $800 million expansion plan last week, but whether new capital will contribute to that is undecided, Kane said.
"I think this is further support the Rigas family is showing for Adelphia and its prospects," he said.
The announcement comes two weeks after the Coudersport, Pa.-based company announced it would raise $400 million by selling Class A common stock to investors. In the past, the Rigas family has injected funds into the company at the same time Adelphia tapped capital markets.
The Rigas family's purchase of Class B shares is expected to close within nine months of the completion of the public offering, the company said. The Rigases will pay the same price per share established in the public offering, minus underwriting costs.
Adelphia stock closed at $58.50 a share Wednesday, up 62 1/2 cents.
Class B shares carry ten votes each, compared with one vote for Class A common shares. Rigas and his four children have 10.8 million of the super-voting shares, a controlling stake.
It's not decided whether Adelphia Communications will contribute capital to the expansion plan of its business phone unit, Adelphia Business Solutions, Kane said. The parent company owns two-thirds of Business Solutions, formerly called Hyperion.
The telephone subsidiary envisions an expansion of its fiber network into the western half of the United States, giving it access to 200 markets with 65 percent of the nation's business telephone base.