BY Fraser Tennant
In an attempt to reduce its debt by more than $10bn, telecommunications company Frontier Communications, along with its direct and indirect subsidiaries, has filed for Chapter 11 bankruptcy to expedite the implementation of a restructuring plan.
In conjunction with a restructuring agreement (RSA), Frontier has received commitments for $460m in debtor-in-possession (DIP) financing. Following court approval, the company’s liquidity will total over $1.1bn, comprising the DIP financing and more than $700m cash on hand.
This liquidity, combined with cash flow generated by Frontier’s ongoing operations, is expected to be sufficient to meet the company’s operational and restructuring needs.
“We are undertaking a proactive and strategic process with the support of our bondholders to reduce our debt by over $10 bn on an expedited basis,” said Robert Schriesheim, chairman of the finance committee at Frontier. “We are pleased that constructive engagement with our bondholders over many months has resulted in a comprehensive recapitalisation and restructuring. We do not expect to experience any interruption in providing services to our customers.
“With a recapitalised balance sheet, we will have the financial flexibility to reposition the company and accelerate its transformation by allocating capital resources and adding talent to enhance our service offerings to our customers while optimising value for our stakeholders,” he continued. “Under the RSA, our trade vendors will be paid for goods and services provided both before and after the filing date.”
Under the RSA, bondholders have, subject to certain terms and conditions, agreed to support implementation of a plan that is expected to reduce the company’s debt and provide significant financial flexibility to support continued investment in its long-term growth.
In addition, Frontier intends to proceed with the sale of its Washington, Oregon, Idaho and Montana operations and assets to Northwest Fiber for $1.352bn in cash, subject to certain closing adjustments, on or around 30 April 2020, and will seek court approval to complete the transaction on an expedited basis.
“With the agreement with our bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” added Bernie Han, president and chief executive of Frontier. “At the same time, the COVID-19 pandemic continues to impact the entire business community, and our team is focused on ensuring the health and safety of our employees and customers.”
News: Frontier Communications files for bankruptcy protection