Up in Maine, FairPoint Communications is asking utility regulators if it can put off a $11.25 million debt payment due at the end of March. FairPoint is hunkering down as it deals with cash flow issues resulting from the slowing economy and its takeover of Verizon's landline business in northern New England.
Last week, FairPont's board suspended quarterly dividend payments. In the company's last financial report, the company said that the transition to a new billing system in New England resulted in a delay in sending out bills, which could reduce available cash in the first half of the year.
A FairPoint executive said the request for a debt payment waiver was a one-time event and its operations should stabilize by summer.
FairPoint's purchase of Verizon's assets for $2.3 billion required the company to borrow heavily to close the deal. As a condition of approving the sale, Maine regulators set a timetable for reducing debt, with FairPoint engaging in quarterly debt reduction payments, with the first by March 31. FairPoint wants to postpone making the first payment until June 30; a date OK with its lenders.
Regulators may go along with a delay, but they may end up squeezing FairPoint for improvements in customer service, an extension in promotional pricing on high-speed Internet service, and fixing delays in providing wholesale services to local competitors.
- The Portland (ME) Press Herald. Article.
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