FairPoint cuts handful of jobs, takes bond rating hit

Compared to Sprint's 8,000 person layoff, FairPoint's layoff of 56 people - less than 1.5 percent of its workforce - is barely worth mentioning. However, a report downgrading of its credit and bond rating is another matter.

FairPoint laid off employees from around the country in legacy markets, reports VON, not in the landline regions FairPoint bought from Verizon back in 2008.  A FairPoint executive said the reason for job cuts was the downturn in the economy.

More disconcerting was a Fitch Ratings report lowering its outlook for FairPoint from "stable to "negative" and dropping some of the company's credit and bond ratings. The report, issued on Jan. 23, said FairPoint's higher-than-expected landline losses and stricter borrowing requirements weren't good. FairPoint's issue default rating and its $551 million senior unsecured notes due 2018 went from "BB-" to "B+."

Finch said it is concerned about the day when FairPoint takes control of the Verizon business, plus the amount of cash (more) being spent under the transition services agreement and system integration. Having more capital spending and a higher dividend payment means FairPoint will have a tighter budget than previously expected.

For more:
- VON talks about cuts. Post.
- Fitch complains about FairPoint. Yahoo/AP News.

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