FairPoint phone company files for bankruptcy

Oct 26, 2009 By CLARKE CANFIELD , Associated Press Writer

(AP) -- Telecommunications services provider FairPoint Communications filed for Chapter 11 bankruptcy protection Monday after agreeing on a deal with key lenders that will help lower its debt by about 62 percent.

FairPoint, based in Charlotte, N.C., owns and operates phone companies in 18 states with a total of 1.65 million lines. Its largest holdings by far are in Maine, New Hampshire and Vermont, where it bought Inc.'s land lines and Internet network for $2.3 billion in 2008.

FairPoint has been struggling under its large debt load and falling revenues, as well as customer-service, billing and other problems since switching over to its own computer systems in northern New England nine months ago.

The filing was widely anticipated as the company has negotiated with banks and bondholders to restructure its debt.

The restructuring deal with lenders holding more than half of its outstanding secured debt will allow the company to reduce its debt from $2.7 billion to $1 billion, CEO David Hauser told The Associated Press.

"What that will do is cause a significant decrease in costs to the company because interest expenses will drop a lot," Hauser said.

The plan is subject to approval by the U.S. Bankruptcy Court in the Southern District of New York.

Hauser said the bankruptcy filing will not affect the company's day-to-day operations or its efforts to expand its high-speed Internet network in northern New England.

"From a customer point of view, this is a nonevent," he said.

Last week, the governors of Maine, New Hampshire and Vermont had said they want assurances from FairPoint that any debt restructuring by the company won't further erode customer service.

FairPoint said Monday it has about $46 million of cash on hand and expects to continue to generate positive operating cash flow. It said it received commitments for a $75 million debtor-in-possession revolving credit facility.

Alfred Giammarino, chief financial officer and executive vice president, said the company is pleased with the terms of the agreement with its lenders.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: Birch Communications buying Cbeyond for $323M

add to favorites email to friend print save as pdf

Related Stories

Fleeing customers haunt phone co. in New England

Mar 12, 2009

(AP) -- Phone companies fear that customers will increasingly switch off their landlines in favor of wireless phones or phone service from cable TV providers. So the last thing FairPoint Communications Inc. needed was to ...

Simmons plans to file for bankruptcy protection

Sep 25, 2009

(AP) -- Simmons Co., the maker of Beautyrest mattresses, said Friday that it plans to file for Chapter 11 bankruptcy protection in a move that will put new owners in charge of the bedding unit and significantly lower the ...

Frontier to buy rural Verizon lines for $5.3B

May 13, 2009

(AP) -- Verizon Communications Inc. said Wednesday it reached a deal to sell scattered phone service areas outside its main Northeastern and Californian territories for $5.3 billion in stock.

Nortel strikes deal to sell business unit to Avaya

Jul 20, 2009

Canadian telecom equipment maker Nortel said Monday it reached a deal to sell its enterprise solutions business to US-based Avaya for 475 million dollars pending approval of a bankruptcy court.

Recommended for you

TCS, Mitsubishi to create new Japan IT services firm

3 hours ago

India's biggest outsourcing firm Tata Consultancy Services (TCS) and Japan's Mitsubishi Corp said Monday they are teaming up to create a Japanese software services provider with annual revenues of $600 million.

Chinese tech giant Alibaba set to make a splash with US IPO

19 hours ago

The largest tech IPO of the year will come from a company that many Americans have never heard of. Alibaba Group - a Chinese e-commerce behemoth - has decided to go public in the U.S. after months of speculation that it would ...

Ex-Apple chief plans mobile phone for India

Apr 19, 2014

Former Apple chief executive John Sculley, whose marketing skills helped bring the personal computer to desktops worldwide, says he plans to launch a mobile phone in India to exploit its still largely untapped ...

User comments : 0

More news stories

Students take clot-buster for a spin

(Phys.org) —In the hands of some Rice University senior engineering students, a fishing rod is more than what it seems. For them, it's a way to help destroy blood clots that threaten lives.

Finnish inventor rethinks design of the axe

(Phys.org) —Finnish inventor Heikki Kärnä is the man behind the Vipukirves Leveraxe, which is a precision tool for splitting firewood. He designed the tool to make the job easier and more efficient, with ...

First steps towards "Experimental Literature 2.0"

As part of a student's thesis, the Laboratory of Digital Humanities at EPFL has developed an application that aims at rearranging literary works by changing their chapter order. "The human simulation" a saga ...