FairPoint reworks its capital structure

FairPoint may have become the eighth-largest U.S.-based telephone operator with the purchase of Verizon's New England landline operations in Maine, New Hampshire and Vermont, but it's come at steep price of additional debt and ongoing operational problems. To stem its financial bleeding, FairPoint has finished a private exchange offer for outstanding senior notes, drawn with a 13.125 percent coupon, that it has to pay by 2018. The company believes this move will help it cut down its second- and third-quarter interest expenses, while enabling it to remain compliant with its senior secured credit facility agreement.     

A lot of FairPoint's financial issues reflect the service provider's inability to resolve ongoing operational and customer issues in the New England region. Since FairPoint took over Verizon's landlines in February, the service provider has been beset with operational problems throughout the region that have affected service to its wholesale, consumer and business customers. As customer issues have spiked, the state Public Utilities Commissions in Maine, New Hampshire and Vermont have all been investigating the service provider's inability to deal with ongoing billing and customer issues. Vermont, for instance, launched an investigation into whether the service provider should be allowed to continue operating in the state. Meanwhile, the Maine PUC levied a $400,000 penalty on the company for poor wholesale service, and New Hampshire's PUC reported a spike in residential customer billing complaints.    

FairPoint's inability to resolve these issues has driven the service provider into a fragile economic state. Just last Friday the New York Stock Exchange told FairPoint that it was not meeting the required listing standards. In response, FairPoint will give NYSE a plan to realign its capital structure and create new growth in New England.       

For more:
- Charlotte Business Journal has this article

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