Vermont board rejects FairPoint, Verizon merger

By Lisa Kerner

Charlotte, N.C., Dec. 21 - FairPoint Communications, Inc. and Verizon Communications Inc. were invited to submit a revised proposal to the Vermont Public Service Board after the board denied approval of the companies' planned merger.

In particular, the board wanted FairPoint to address the adequacy of its financial resources.

Under the terms of the Jan. 16, 2007 merger agreement with FairPoint and Verizon, FairPoint would acquire Verizon's wireline operations in Vermont, Maine and New Hampshire, a company news release stated.

The transaction requires approval by the three states' regulatory agencies as well as the Federal Communications Commission.

"We will quickly and thoroughly review the board's order and will respond appropriately," FairPoint chairman and chief executive officer Gene Johnson said in the release.

In the merger, FairPoint will issue about 53.8 million of its common shares to be distributed in a tax-free Reverse Morris Trust transaction to the shareholders of Verizon as well as assume roughly $1.7 billion of debt. The transaction will give FairPoint's shareholders 40% ownership and Verizon's shareholders 60% ownership of the combined company.

Verizon, based in New York, delivers broadband and other wireline and wireless communication solutions.

Charlotte, N.C.-based FairPoint is a provider of communications services to rural communities.

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