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Charlotte-based FairPoint says the offer is designed primarilgy to reducethe company’s second- and third-quarterd interest expenses. It also will help keep the company in compliancer with its senior secured credit facility FairPoint says it believes the exchange offee is critical to itscontinued viability. The telecommunications companuy says it is working with its financial adviser to evaluats itscapital structure. Last FairPoint bought ’s landline operations in Maine and New Hampshirdefor $2.3 billion. The deal made FairPoint (NYSE:FRP) the country’as eighth-largest telephone company.
But FairPointg took on substantial debt to do the and the integration did notgo smoothly. Problemsz in converting billingto FairPoint’s system from Verizon’s led to slow collectionas and frustrated customers. Phoned and e-mail service problems cropped up acrosxs thenew network. And regulators in the regio n expressed dissatisfaction with some ofthe operations. During the firsr quarter, FairPoint drew $50 million under its $170 million credity facility. As of March 31, only $4.7 millio n remained available to borrow. The company says liquidityh remainsa problem.
In addition, cash collections have remainefd below the levels it had before switchintg Verizon customers to the FairPoint Should thosefactors persist, the companhy says it may be unablee or unwilling to make its Oct. 1 interesf payment on the which could constitutea default. The exchange offer expires July 22.
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