Actually his company, Cequel III, is one of several groups who have taken immediate advantage of Classic Communications' recent emergence from the completely legal scam of Chapter 11 Bankruptcy. Through this chicanery the common stock of Classic was rendered entirely valueless in January of 2003. Of course the largest creditors were given the opportunity to swap debt for equity in the newly formed company that is, you guessed it, the same name and offices and subscribers and equipment and employees and even some of the same upper management. Coincidentally, the announcement of Kent and his Cequel III associates investing in, and taking ownership of, Classic Communications and moving it's headquarters from Texas to St. Louis, also coincided with the announcement of the sale of Classic's Nebraska properties to Pinpoint Communications.
One can only speculate that had these deals, which have obviously been in the offing for some time now, been consummated PRIOR to the Chapter 11 dissolution could not everyone, including common stockholders, have shared in the future success? This type of very naughty behavior at this level in corporate America is what has the common stockholders of many struggling companies, such as Charter Communications which arguably could be headed down this very same path, nervous to the point of potentially undervaluing otherwise solid equity securities. The resultant side effects ultimately trickle down to employees, customers, and other stakeholders (vendors, contractors, etc.) in terms of budget cutting, layoffs and other equally distasteful implications. In the movies someone files and wins a class action suit against these villains, but in real life regular old people just suffer the consequences.
Don’t get me wrong though, because I am a very big fan of Jerry Kent. When he originally left Charter I posted my high opinion of him and my first public speculation about Paul Allen’s real abilities on this forum. I have very closely followed, and traded, Charter stock ever since. The first thing my fiancé said when I shared the new Jerry Kent/Classic link with her was “we are going to buy into his new company aren’t we?” and my answer was ABSOLUTELY. He knows cable very well and is an exceptional businessman and leader. It is very possible that his outfit will soon be announcing the acquisition of strategically positioned rural properties. Quite likely they are considering biting off a piece of Charter here and there, especially given the recent defections of certain Charter management to Cequel. But that's okay because we need lots more Jerry Kents’ and Bill Bresnans’ and far less Michael Armstrongs’, Paul Allens’ and Steven Cases’ to get this industry jumpstarted. Even ‘ol Ted Turner, if he would put his money where his mouth is not, may soon provide our industry with a much needed boost when he jumps back into (with or hopefully without Malone) the game.
My main point on this is that we Americans suffer from this misguided fallacy that to win someone must always lose, when that is seldom true. If you get the Silver or Bronze in the Olympics did you really lose? If you even make it to the Olympics you have, in effect, won. And if you made it to the state qualifying level but advanced no further then I’ll bet that your friends and family would be pretty darned proud of you. So what is it with these egomaniacs up at the so-called top? Are they unhappy with their wives and children? Did someone pick on them at school? Do they have the Viagra blues? What is the root cause of their clearly sociopathic tendencies? Oh yeah, that’s right, it’s greed as they all confide with that knowing smirk and occasional wink. Why, then, does Warren Buffet not behave this way? He is worth a whole lot more dough than most of them, and Wall Street adores him, and he does not exactly just give it away. Oh yeah, that’s right, he has CLASS. I am not referring to officially bestowed social class but real class…like Jimmy Stewart…like Jimmy Carter…perhaps like your father, mother, neighbor down the street, the guy at the hardware store, the Prime who always finds a way to pay on time even at their own personal cost…or many, many others that you have and will encounter in your daily life. Everyone has an ego; it is after all a necessary part of our psyche. But everyone does not always insist on behaving like a little cock rooster, with ruffled feathers, strutting around in a barnyard full of manure.
Anyway, I am very happy to see Jerry Kent back!
Just for grins here is an old post…
Classic to "stick it" to stockholders
by Magi , 11/12/2002 1:52:52 PM
"Stock holders will receive nothing under the plan and all equity interests will be canceled, court papers said."
Well, so much for the "reliable" old company stock plan, which is always touted as such a great benefit...I wonder how long it will be before the new vulture owners sell Classic off piecemeal at great personal profit?
Classic Communications Creditor Panel Disclosure Statement OK'd
WILMINGTON, Del. -(Dow Jones)- A bankruptcy court Friday approved the adequacy of a disclosure statement for a plan of reorganization filed by the committee of unsecured creditors and a pre-petition bank group in the Classic Communications Inc. (CLSCQ) Chapter 11 bankruptcy case.
The proposed plan calls for Classic Communications to emerge from bankruptcy with a reorganization value of $300 million to $360 million, said Thomas Kent, an attorney representing the creditors' committee.
The plan proposes to restructure the company's debts and make bondholders the majority owners of the reorganized entity.
Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington scheduled a hearing to consider confirmation of the plan on Dec. 10 at 5 p.m. EDT. Votes and objections to plan confirmation must be submitted by Dec. 4.
The creditors' committee will file a supplement to the disclosure statement containing various documents, including the terms of a proposed $20 million exit facility, by Nov. 20. If the panel is unable to meet that deadline, the confirmation hearing will be moved to Dec. 17 and the vote and objection deadline will be moved to Dec. 11.
Under the terms of the plan, Classic Communications will continue operations and about $200 million of pre-petition debt would be restructured through the issuance of new Term A notes. The company will also initiate a $50 million rights offering of new preferred stock, with the possibility of offering an additional $10 million in shares.
The plan will be funded through a $20 million exit facility, provided by some of the company's pre-petition lenders. All the lenders have the option of participating in the facility.
Lenders that choose to participate in the exit loan will receive their share of $20 million in cash, a share of $60 million in the Term A notes and a share of $82 million in Term B notes, Kent said. The participating lenders can also choose to receive a portion of $40 million in subordinated notes. Lenders that don't take part in the exit facility will receive a portion of the Term B and Term A notes.
Goldman Sachs, also a pre-petition claimant, would receive a $750,000 agency fee. Goldman Sachs has already agreed to participate in the exit loan.
The driving force behind the plan is the conversion of roughly $406 million of bond claims into 1 million shares of new common stock. Bondholders will receive a pro-rated portion of the 1 million shares, resulting in a 52% ownership stake in the reorganized company.
The creditors' committee and bank group said the combination of the rights offering and the financing package will be enough to pay allowed administrative expense claims, allowed fee claims, pre-petition bank group and other cash amounts payable under the plan.
As reported, administrative claims will be paid in full on the plan's effective date or 30 days after an administrative claim becomes an allowed claim. Priority tax claims will be paid in six equal annual payments with a 6% interest rate.
Holders of general unsecured claims will receive 25% of their claims, payable in four equal quarterly installments, with the first installment paid as soon as possible after the plan's effective date.
Stock holders will receive nothing under the plan and all equity interests will be canceled, court papers said.
Classic Communications has been under Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., since Nov. 13, 2001. It listed assets of $711.3 million and liabilities of $641.8 million as of June 30, 2001, in its bankruptcy petition.
The Tyler, Texas, company provides cable television services in 10 states and served roughly 352,956 cable subscribers as of Sept. 30, 2001. Classic Communications also provides cable services to 130 correctional facilities in 15 other states.
-By Tom Becker; Dow Jones Newswires; 302-656-8830
(This story was originally published by Dow Jones Newswires)
Copyright (c) 2002 Dow Jones & Company, Inc.
All Rights Reserved
Source: EDGAR Online, Inc,
© Copyright 2002. All rights reserved
This time around he is running Classic
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