Frontier Communications agrees restructuring with bondholdersTuesday, April 14th, 2020
Frontier Communications Announces Restructuring Support Agreement to Support Continued Investment in Long-Term Growth
- Restructuring Support Agreement Supported by More Than 75% of Bondholders; Files Voluntary Chapter 11 Petitions to Implement Agreed-Upon Terms of Financial Restructuring Plan
- Continuing to Provide Uninterrupted Service to Customers across the U.S.; Trade Vendors Unimpaired for Pre- and Post-Petition Obligations
- Plan Expected to Reduce Debt by More Than $10 Billion
- Secures Commitments for $460 Million in Debtor-in-Possession Financing; Combined with Cash on Hand Totals Over $1.1 Billion in Liquidity
NORWALK, Conn. — Frontier Communications Corporation (NASDAQ: FTR) (“Frontier” or the “Company”) today announced that, together with its subsidiaries, it has entered into a Restructuring Support Agreement (“RSA”) with bondholders representing more than 75% of Frontier’s approximately $11 billion in outstanding unsecured bonds (the “Bondholders”). The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan (the “Plan”) that leaves unimpaired all general unsecured creditors and holders of secured and subsidiary debt. Under the RSA, the Bondholders have, subject to certain terms and conditions, agreed to support implementation of a Plan that is expected to reduce the Company’s debt by more than $10 billion and provide significant financial flexibility to support continued investment in its long-term growth. To implement the Plan, the Company and its direct and indirect subsidiaries voluntarily filed petitions under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York.
Frontier expects to continue providing quality service to its customers without interruption and work with its business partners as usual throughout the court-supervised process. The Company has sufficient liquidity to meet its ongoing obligations. Under the RSA, trade vendors will be unimpaired for both pre- and post-petition obligations.
“We are undertaking a proactive and strategic process with the support of our Bondholders to reduce our debt by over $10 billion on an expedited basis. We are pleased that constructive engagement with our Bondholders over many months has resulted in a comprehensive recapitalization and restructuring. We do not expect to experience any interruption in providing services to our customers,” said Robert Schriesheim, Chairman of the Finance Committee of the Board of Directors. “With a recapitalized 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 optimizing value for our stakeholders. Under the RSA, our trade vendors will be paid for goods and services provided both before and after the filing date.”
“With this agreement with our Bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” said Bernie Han, President and Chief Executive Officer. “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. The services we provide to our customers keeps them connected, safe and informed, and I would like to thank our team for their continued dedication, especially in light of the current environment.”
In conjunction with the proposed financial restructuring, Frontier received commitments for $460 million in debtor-in-possession (“DIP”) financing. Following Court approval, the Company’s liquidity will total over $1.1 billion comprising the DIP financing and the Company’s more than $700 million cash on hand. This liquidity, combined with cash flow generated by the Company’s ongoing operations, is expected to be available and sufficient to meet Frontier’s operational and restructuring needs. The DIP financing agreement provides for the additional financing to convert to a revolving exit facility upon emergence.
In addition, the Company intends to proceed with the sale of its Washington, Oregon, Idaho, and Montana operations and assets to Northwest Fiber for $1.352 billion in cash, subject to certain closing adjustments, on or around April 30, 2020, and will seek Court approval to complete the transaction on an expedited basis.
In conjunction with the Chapter 11 filing, Frontier will file a number of customary first day motions with the Bankruptcy Court. These motions will allow the Company to continue to operate in the normal course of business without interruption or disruption to its relationships with its customers, vendors and employees. The Company expects to receive Court approval for these requests.
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