FairPoint sets pricing in tender for 2008 and 2010 notes

New York, Feb. 4 - FairPoint Communications Inc. said it has set pricing in its cash tender offers and related consent solicitations for all four series of its outstanding notes - FairPoint's 9½% senior subordinated notes due 2008, its floating-rate callable securities due 2008, its 12½% senior subordinated notes due 2010 and its 11 7/8% senior notes due 2010.

For the 12½% notes, FairPoint will pay 1,083.30 per $1,000 principal amount, including a $20.00 consent payment that will only be paid to holders who tendered by the consent deadline.

For the 11 7/8% notes, the figure is $1,180.89, including a $20.00 consent payment.

At its previous announcement on Jan. 28, FairPoint extended the offers to 9 a.m. ET on Feb. 8, subject to possible further extension, from the original Feb. 3 expiration.

The company said that as of 5 p.m. ET on Jan. 27, tenders and consents representing 99.8% of the 9½% notes, 67.7% of the floating-rate securities, 89.7% of the 12½% notes and 99.1% of the 11% notes had been received by FairPoint, unchanged from previously announced levels.

As previously announced, FairPoint Communications, a Charlotte, N.C.-based provider of telecommunications services to rural markets, said on Jan. 5 that it had begun cash tender offers for all four series of its outstanding notes and was also soliciting consents to changes in the respective indentures. The company set 5 p.m. ET on Jan. 20 as the consent deadline for the offers and initially said they would expire at 5 p.m. ET on Feb. 3, although the expiration deadline has now been extended.

FairPoint said that the purchase price for the 9½% notes would be $1,015.42 per $1,000 principal amount. The purchase price for the floating-rate securities would be $982.50 per $1,000 principal amount.

It said the purchase price for the 12½% notes would be calculated based on a formula employing a 50 basis point fixed spread over the yield on the price determination date of a reference security, the 1 5/8% U.S. Treasury note due April 30, as well as using a present value on the prospective settlement date for the notes of $1,062.50 per $1,000 principal amount, the amount payable on the first call date, and all scheduled interest payments from the settlement date to May 1.

The purchase price for the 11 7/8% notes would be calculated based on a formula employing a 50 basis point spread over the yield on the pricing date of the reference security, the 2¼% U.S. Treasury note due Feb. 15, 2007, as well as using the sum of (a) 35% of $1,118.75 per $1,000 principal amount of the 11 7/8% notes (the equity clawback amount for the 11 7/8% notes under their indenture), and (b) 65% of the present value on the settlement date of $1,059.38 per $1,000 principal amount (the amount payable on the first call date) and all scheduled interest payments from the settlement date to March 1, 2007.

FairPoint said that holders tendering their notes and providing consents by the consent deadline would receive a consent payment of $20 per $1,000 principal amount. Holders tendering their notes after the consent deadline would not receive the consent payment. All tendering noteholders would also receive accrued and unpaid interest up to but not including the settlement date.

It said that notes tendered and consents delivered could be withdrawn or revoked up to but not after the consent deadline, which was also the withdrawal deadline.

The company said that among other things, the proposed indenture amendments would eliminate most of the respective indentures' principal restrictive covenants and would amend certain other provisions. Adoption of the amendments would require the consent of the holders of at least a majority of outstanding principal amount of the 12½% notes, a majority of the outstanding principal amount of the 11 7/8% notes, and a majority of the total outstanding principal amount of the two series of 2008 notes - the 9½% notes and the floating-rate callable securities - voting as a single class. Holders tendering their notes would be required to also consent to the proposed amendments, and holders could not deliver consents to the proposed amendments without also tendering their notes.

FairPoint said the tender offers are conditioned upon, among other things, its completion of its proposed initial public offering of common stock and obtaining a new senior secured credit facility; a minimum tender condition; and a required consents and execution of the supplemental indentures condition. FairPoint said it was expecting to complete the IPO of its common stock and obtain a new senior secured credit facility on or prior to the expiration date of the tender offers.

On Jan. 21, Fair Point announced that it had received the required amount of consents to its proposed indenture amendments from the holders of the four series of notes by the tender offers' consent deadline, which expired as scheduled at 5 p.m. ET on Jan. 20, without extension. As of that deadline, holders had tendered 99.8% of its outstanding 9½% notes, 67.7% of the floating-rate securities, 89.7% of its 12½% notes, and 99.1 % of its 11 7/8% notes. Having received sufficient consents to amend the respective indentures, supplemental indentures incorporating the indentures were executed, and the company said they would become operative on the date that it would accept validly tendered notes for purchase and payment.

Banc of America Securities LLC is the dealer manager and solicitation agent (888 292-0070 or 212 847-5834). Global Bondholder Services Corp. is the information agent (212 430-3774).

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