FairPoint extends early deadline in exchange offer for 13 1/8% notes

By Jennifer Chiou

New York, July 8 - FairPoint Communications, Inc. announced the extension of the early consent deadline in the private exchange offer for its outstanding 13 1/8% senior notes due 2018 held by qualified institutional buyers and accredited investors.

The early deadline is now 5 p.m. ET on July 13, prolonged from July 8.

The exchange offer will expire at 11:59 p.m. ET on July 22. It began on June 24.

The company is offering new notes on a par-for-par basis. Holders will also receive accrued interest up to but excluding the settlement date in the form of cash or new notes, at FairPoint's option.

FairPoint said the new notes will be identical to the existing notes in all material respects except that (a) FairPoint will be allowed to make the Oct. 1 interest payment in kind or through a combination of cash and in-kind payment and (b) the new notes will mature on April 2, 2018, the day after the maturity date of the existing notes.

The company already warned that it may be unable or unwilling to make the Oct. 1 interest payment on the existing notes. After the expiration of a 30-day cure period, the failure to make this payment would constitute an event of default under the indenture governing the notes and FairPoint's senior secured credit facility.

The company is soliciting consents from the holders for amendments that would eliminate or amend substantially all of the restrictive covenants in the indenture and modify some of the events of default and some other provisions.

A tender by any holder in the exchange offer will constitute a consent in the consent solicitation.

The company will pay a consent fee of $2.50 for each $1,000 principal amount of notes tendered by the early deadline.

The offer is conditioned on the receipt of tenders for at least 95% of the principal amount of the outstanding notes.

FairPoint previously said the exchange offer is primarily designed to reduce its cash interest expense for the second and third quarters and to help it maintain compliance with the interest coverage ratio maintenance covenant in its credit facility for the period ending June 30.

As a result of issues that occurred following the transition to its new systems, the company has been unable to fully execute its 2009 operating plan and revenue has continued to decline. In addition, FairPoint also previously said cash collections have remained below pre-cutover levels, causing further stress on liquidity.

Because of this, the company already said it believes the consummation of the exchange offer is "critical to its continued viability" and that maintaining the credit facility with its current terms has "significant value" due to favorable provisions that FairPoint believes are unlikely to be replicated in the current lending market.

Among others, these favorable provisions include interest rates of Libor plus 250 to 275 basis points and extended maturity dates, according to a previous company release.

The company said it is working with its financial adviser to evaluate its capital structure and to explore options for a broader and more permanent restructuring of its capital structure.

The information agent for the exchange offer is Global Bondholder Services Corp. (866 389-1500 or 212 430-3774).

FairPoint provides communications services and is based in Charlotte, N.C.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.