Vermont's not waiting for the other shoe to drop in the ongoing FairPoint Communications saga, as this week the state said it had hired a bankruptcy advisor to help weigh its options if the North Carolina-based firm decides to proceed with a bankruptcy filing. The company on Wednesday filed notice with the Securities and Exchange Commission that it likely would file for bankruptcy by the end of this year unless debt holders allow it to defer interest payments. FairPoint said it needed to be allowed to restructure some $530 million in debt-and avoid interest payments due in October--to survive.
That FairPoint is cash strapped should come as no surprise. It bought the landline networks in Vermont, New Hampshire and Maine last year from Verizon for $2.3 billion, and has been struggling to get the system upgraded and operating efficiently since it took over operations in January. It's made a hash of its billing that's only recently begun to be sorted out.
FairPoint's customer service woes-days of outages, billing hassles, long service waits and even call centers that have gone on the fritz-have cost the company some 12 percent of its customers, double what they expected to lose.
Vermont Department of Public Service Commissioner David O'Brien said the hiring of a bankruptcy expert is simply a precaution to ensure Vermont isn't left out in the cold if FairPoint files. FairPoint, meanwhile, contends that even if it did file for bankruptcy protection, service in Vermont would continue as usual.
And, that may be the bad news.
- see this Vermont Public Radio report
From bad to worse for FairPoint
New Hampshire puts FairPoint on notice
Fairpoint seeks delay in debt repayment
Fairpoint reports Q4 loss, suspends dividend