9/28/09 | 2 comments
FairPoint in talks with lenders
By The Associated Press
AP FILE PHOTO
CHARLOTTE, N.C. Troubled phone company FairPoint Communications Inc. said Monday that it's in talks with some of its lenders in hopes of restructuring its debt, but still may be forced to file for bankruptcy protection.
FairPoint said that as part of those talks it has entered into a forbearance agreement with lenders that together hold more than 50 percent of the loans and commitments outstanding under its credit facility.
FairPoint has payments under the credit facility and its interest rate swap agreements totaling about $42 million due on Wednesday. The company said that it likely will fail to comply with the interest coverage ratio and leverage ratio covenants in the credit facility for the period ending the same day.
Under the agreement, if that were to happen or other certain events of default were to occur, the lenders have agreed to not accelerate the maturity of the loans outstanding under the credit facility or take other action until Oct. 30.
FairPoint said its talks with its lenders are focused on developing a restructuring plan that would reduce its debt and interest expense and improve its liquidity and financial flexibility, but cautioned that such a restructuring plan may require it to file for Chapter 11.
FairPoint, which is based in Charlotte, N.C., owns and operates phone companies in 18 states with a total of 1.65 million access lines, but its largest holdings by far are in northern New England. FairPoint last year bought for $2.3 billion Verizon's landline and Internet assets in Maine, New Hampshire and Vermont, where it has been plagued with customer service and operational problems.
FairPoint shares fell 21 cents, or 32 percent, to 45 cents in midday trading