FairPoint, Verizon reach agreement with Vermont regarding proposed merger

By Lisa Kerner

Charlotte, N.C., Jan. 8 - FairPoint Communications, Inc. reached an agreement with the Vermont Department of Public Service in FairPoint's proposed acquisition of Verizon Communications Inc.'s wireless operations inVermont.

In December, FairPoint and Verizon were invited to submit a revised proposal to the Vermont Public Service Board after the board denied approval of the companies' planned merger.

The board wanted FairPoint to address the adequacy of its financial resources.

FairPoint agreed to:

• Commit approximately $40 million in capital expenditures in Vermont in each of the first three years following transaction close;

• Commit to additional broadband expansion in Vermont to ensure broadband is available to all customers in at least 50% of its markets by Dec. 31, 2010;

• Adopt a performance enhancement plan solidifying its commitment to improve service quality and expand broadband availability;

• Adopt an independent third-party monitor for the conversion from Verizon's systems to FairPoint's systems; and

• Adopt a dual pole remediation project.

The Vermont Department of Public Service agreed that subject to the conditions, the merger transaction "will promote the public good and the general good of the state," a company news release stated.

FairPoint and Verizon filed a motion requesting the board approve the transaction as modified.

"We're pleased with the stipulation and appreciate the hard work and support of the Vermont Department of Public Service," FairPoint chairman and chief executive officer Gene Johnson said in the release.

"We look forward to working with the department as we serve the public interest in the state of Vermont."

Under the terms of the Jan. 16, 2007 merger agreement with FairPoint and Verizon, FairPoint will acquire Verizon's wireline operations in Vermont, Maine and New Hampshire, it was previously reported.

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

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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