37°F Cloudy 
What's happening in:
2/9/10
|
25 comments
update FairPoint plan would cut debt sharply
Firm: Reorganization won’t hamper Internet expansion
AP PHOTO BY PAT WELLENBACH
A pedestrian passes a FairPoint Communications pay phone in Brunswick recently. The telecommunications company’s debt would be cut by nearly two-thirds under a bankruptcy reorganization plan filed Monday.
|
PORTLAND, Maine — The telecommunications company FairPoint Communications Inc.’s debt would be cut by nearly two-thirds under its bankruptcy reorganization plan filed Monday, but the company said the reorganization won’t prevent it from expanding broadband Internet in Maine, New Hampshire and Vermont.
The plan was outlined in a filing in U.S. Bankruptcy Court in New York, where FairPoint filed for Chapter 11 bankruptcy in October. The plan calls for FairPoint’s debt to be reduced to about $1 billion from nearly $2.8 billion.
Secured creditors will receive shares of newly issued stock amounting to an initial 92 percent ownership stake in the company. Unsecured creditors will get the remaining 8 percent.
“When FairPoint emerges, it will do so with a capital structure that contains significantly less debt,” FairPoint CEO David Hauser told reporters on a conference call. “As a result, FairPoint’s financial position and ongoing liquidity will be significantly strengthened.”
The plan includes agreements with officials in Vermont and New Hampshire that reaffirm the company’s plans to spend money to expand broadband coverage, as well as meet customer service targets. The company was continuing discussions with Maine officials, Hauser said.
With operations in 18 states, FairPoint calls itself the nation’s seventh-largest phone company, with northern New England making up the biggest part of the business by far.
FairPoint, based in Charlotte, N.C., has been hobbled by heavy debt and technical problems since paying $2.3 billion for Verizon Communications’ land line and Internet operations in Maine, New Hampshire and Vermont in 2008.
The plan is now open to comment from creditors and is subject to approval by the bankruptcy court.
The largest class of creditors includes banks and other lending institutions that are owed $2.1 billion and will receive about 88 cents on the dollar, mainly in stock, according to the company plan. Unsecured creditors who are owed $635 million will be get paid about 17 cents for each dollar they are owed, also primarily in stock.
Another group of unsecured creditors, those owed $10,000 or less, will be paid 100 percent of their claims, according to the plan. Those claims total $3.3 million.
The plan also provides details of a new contract with unions representing about 2,500 employees in northern New England. The contract includes a one-year wage freeze beginning in August, but extends the contract by a year with workers getting a 3 percent raise in 2013 for the contract’s final year.
Don Trementozzi, president of the Communication Workers of America Local 1400 in Portsmouth, N.H., expects the contract to be approved when members of his union and the International Brotherhood of Electrical Workers vote this month. The unions have been working with the company to cut costs, he said. “At the end of the day we felt it was fair,” he said.
To give creditors their ownership stake in the company, the company plans to issue more than 51 million shares of new stock. Another 6.3 million shares will be issued over time as part of the company’s long-term incentive program that awards executives stock shares or stock options for meeting performance goals.
The payout of 17 cents per dollar owed could have been worse for unsecured creditors, said Dick Davies, Maine’s public advocate. “It was looking like they’d be getting 2 cents on the dollar,” he said.
The reorganization plan also includes agreements with the states of Vermont and New Hampshire that ensure state regulators continue to maintain authority over the company and that the previous targets for customer service, maintenance of the existing telephone system and expansion of broadband Internet will be met. The company was continuing discussions with Maine officials on a similar agreement for that state, Hauser said.
The only substantive change was that broadband expansion goals for 2010 were pushed back from April 1 to Dec. 31; target dates for 2011, 2012 and 2013 remain unchanged, said Richard Head, associate attorney general in New Hampshire.
Associated Press writer David Sharp in Portland contributed to this report.
Not registered? Click here
|
E-mail this
|
Print this
|
Local News
Anyone who enjoys viewing work of aspiring artists really shouldn't miss the annual My Student Art Exhibit, which opens …
FREEPORT, Maine — Outdoors clothing retailer L.L. Bean says sales dipped again in 2009 but the company managed to …
AUGUSTA, Maine — Leaders of the Passamaquoddy Tribe sketched out their proposal Thursday for a November ballot …
AUGUSTA, Maine — Nearly everyone who testified Thursday on legislation designed to fine-tune a voter-approved …
The state's highest court on Thursday dealt the Friends of Lincoln Lakes a major legal defeat by reaffirming state …
Recent comments
Off to protect the opium harvest in late April, and assure the profits of the narco criminals who control our …
Only Mic Mac, Passamaqoddy, or Penobscot Indians are MAINERS
AS I SEE IT, by Mainer Mike Brown
Pleading guilty often gets a criminal a lesser sentence. But if your guilty, …
Wow Christio it almost sounded like I could hear little teardrops hitting the keyboard as Ralphy was typing that …
Downeaster09,
It is ironic and funny when someone results to name calling and the name they choose actually fits …
Bring back verizon
All part of the plan, Verizon sells landline service to Fairpoint and gives them a rebate. Fairpoint then negotiates new union contracts and then-
Fairpoint declares bankruptcy and Verizon comes in to buy back its landlines in northern new england.
My bundles BANKRUPT! ;-)
I'll need to figure out how to my bills at 17 cents on the dolaar, and keep all my stuff. That would be great, however, I don't think my banks would go for it.
As always, the system protects the rich, and scr*ws the average person.
how to your bills?
I think you just accidentally your post.
This whole thing is a mess and once again the debt holders get screwed. If you can't make a company work just declare chapter 11 and screw everyone.
"The debt load of telecommunications provider FairPoint Communications Inc. will be cut by nearly two-thirds under its bankruptcy reorganization plan."
That means 2/3 of the money they owe to vendors, suppliers, investors, etc; won't get paid.
tuffnoogies wrote: My bundles BANKRUPT! ;-)
I call it the Fairpoint Bungle! So instead of the Fairpoint furry Bungle hairballing a dollar it will be only 33 cents in the future.
Ok so they only have to repay 17 cent on the dollar for unsecured debt. They can go out and rack up billions in debt, get in way over their head, and then just look to bankruptcy to bail them out. While we, every day people who strugle to make ends meet, have to pay our debts in full no matter what. And when the bill collectors start calling they don't care what happened or why they just want their money. I think it time for large corps. to be accountable for what they do. They should have to pay full price for their debts, after all if we don't pay them we loose our phone service!!
They may be a good phone company, but their email system is crap. I've switched to gmail.
The regulators who let this happen should be accountable for the mess. It was obvious that Fairpoint bit off way more than it could chew They should come up with the means to pay of the debt. Companies should not be allowed to weasel out of commitments that they never intended to honor. This is the same reason the whole economy is in the toilet. No acccountability.
I've never had a problem with Fairpoint...I don't have phone service through them (I use their dilute internet) but so far not a problem
Whatever happened to the scheme to get money from non Fair Pointe customers to help pay for lawyers? If I go bankrupt too,, can I write off "my debt" to these lawyers who don't represent my interests?
Fairpoint is so rediculous. They owe me a refund after I terminated my service with them after a total nightmare with trying to get service at my new home. I spoke with them in September to make sure my refund check would be taken care of, checked several times & they told me no problem. I still don't have my check. Fairpoint is a big scam if you ask me, they have been ordered by the better business bureau & still I don't have my money. I guess you can't get blood out of a turnip, but I want what's mine! I work hard for my money!
Verizon does not care about this area. They want totally out of landlines, except those big population areas Look what they did to Hawaii TELcom, again with the phone book publishers and now Fairpoint...all declared bankrupsy. And now trying to sell their less profitable west coast lines to another company who is smaller than FairPoint Locally, they screwed lots of Unicel employees when they bought them out and outsoursed them to India or some place that cant speak english. Believe me, you dont want Verizon back here
The real crook here is Verizon. It sold a bunch of crap to Fairpoint for $2.3 BILLION. When Fairpoint declares bankruptcy it lists only $2.8 billion in total debt. Over 82% of all the money Fairpoint borrowed it gave the big weasel, Verizon. Verizon should be investigated; they negotiated in bad faith. Verizon knew the system was junk and that's why they sold it. Fairpoint was taken to the cleaners and the states who were supposed to oversee the deal were to financially illiterate to understand the deal to begin with - big surprise there. Again, Verizon is the bad guy here; Fairpoint was the one getting screwed.
So, if you're fortunate enough to be a Fairpoint customer, when your bill comes, you only have to pay $0.17 on the dollar, right?????? What a great deal, I may go back to them.
This never should have happened. Our regulators in all three states were warned about FairPoint and there ineptness in the communications industry. This goes far beyond just an inconvenience to the residents of New England receiving poor service or no service at all, being overbilled or not being billed at all, businesses not being afforded adequate communications with the rest of the world, or proper maintenance of FairPoints so called Broad Band Service, IT IS A DISGRACE AND HAS BECOME A NORTHEAST SECURITY ISSUE.
The people we meet in the field are not the problem, they are working under very strenuous and sometimes hazardous conditions due to the lack of those in upper management having the required skills to meet the challenge. This was brought out time and time again at the hearings held by the regulators in all three New England States and yet the allowed this buy out to proceed.
The next big headline you will be reading will go something like: NEW ENGLAND GOVENORS REQUEST THE WHITEHOUSE DECLARE MAINE, NEW HAMPSHIRE AND VERMONT A COMMUNICATIONS NET WORK DISASTER AREA EFFECTING THE REGIONAL SECURITY AND WELFARE OF ALL IT’S CITIZENS. THEY HAVE REQUESTED 4.6 BILLION DOLLARS TO HIRE VERIZON ON A COST PLUS CONTRACT BASIS WITH THE AIDE OF THE NATIONAL GUARD TO RESTORE COMMUNICATIONS AND BROAD BAND SERVICE TO THE REGION.
THE REQUEST HAD TO BE HAND DELIVERED TO THE WHITE HOUSEN DUE TO THE LACK OF RELIABLE COMMUNICATIONS BETWEEN NEW ENGLAND AND THE REST OF THE COUNTRY. UNFORTUNATELY THE MESSENGER WAS SHOT BY CAPITAL GUARDS BECAUSE THEY COULD NOT INDENTIFY AND VERIFY HE WAS A STATE TROOPER AND NOT A TERRORIST, DUE TO THE LACK OF A RELIABLE COMMUNICATION SYSTEM BETWEEN THE MAINE GOVENORS OFFICE AND THE WHITE HOUSE. THE GOVENORS ARE NOW WAITING FOR ANOTHER VOLUNTEER TO STEP FORWARD.
So, since the lenders will now be debtors in possion, will they fire the board and sell the company to some one that knows what they are doing?
Who is to BLAME for the devastating economy we now live in, where the USA is in serious financial difficulty, both government, corporate and private parties? Even the Euro-dollar is on the verge of collapse, and several European countries are facing bankruptcy. The government of Dubai, has just built the world's tallest building, and their economy is facing bankruptcy. Meanwhile, the USA squanders money on two wars, as our corporations (like Verizon) outsource our calling center jobs to India, and our illegal drugs killed 2.000 Mexicans at the border last year, via gun violence. Were you expecting Fairpoint to avoid all of these problems?
I'm glad my phone still works, and as a rural Mainer, who lives within 3 miles of the switching station, I even have T-1 broadband. IF YOU'RE LIVING IN MAINE, JUST BE GLAD YOU'RE STILL ALIVE, and that we don't have drive by shootings on our street! :)
Let me try to understand this. If someone is owed $10,000 from Fairpoint, they will get 100% back; $10,000. If another is owed $50,000, they will get 17 cents per dollar, which is $8,500. Of course the banks get back 88 cents on the dollar, all while Fairpoint gets rid of 1.8 BILLION dollars of debt. The only paid 2.3 billion for Verizon. Net cost of their purchase then is 500 million dollars. I'm guessing all the executives are still making their full salary. And Fairpoint is promising to spend huge money to expand broadband coverage. Whose money are they going to spend now?
I need to find a good lawyer. I owe $200,000 on my house and need to get that debt reduced to $71,428, so I can afford a new roof and heating system.
Fairpoint is totally incompetent. Investors have taken a beating. Obviously the best course of action is to let them off the hook, give them another chance because.....???
They want to spend huge money to expand broadband to rural areas in Maine. There is NO money in rural Maine. Who exactly is going to pay for this broadband service once it's installed?
Good grief.
PeterV, I agree with you, Who's money are they going to spend now? Nowhere in this article does it mention who is going to loan Fairpoint money to continue to expand DSL coverage to underserved areas. With no loan to buy the equipment, how does Fairpoint expect to keep their promises to the PUC? I highly doubt that their current revenues can support their current operations, pay down their reduced debt, and expand DSL. So in essence, any promise they may make to the PUC are like all the other promises made before - hollow. What is it going to take to get the PUC to see that they're being lied to time and time again? Take a look at Verizon, who is trying to run their plain old telephone service as a standalone business. They are laying off thousands, and they don't have the debt load and DSL rollout capital program that Fairpoint does. Now how is Fairpoint going to keep their plain old telephone system profitable, pay off debt, and expand DSL coverage? Something just doesn't add up here. My prediction is Fairpoint will be in bankruptcy once again within 2 years. No matter how you cut it, they simply don't have a pot to piss in.
Fairpoint and Verizon will be rollin' in dough when Obamanomics kick in full swing, as a matter of fact we'll all be livin' large Ahhhhhhh, good times are on the way!
RE: " The plan includes agreements with officials in Vermont and New Hampshire that reaffirm the company’s plans to spend money to expand broadband coverage, as well as meet customer service targets."
I can't imagine how or where they plan to expand or meet targets. I don't know if their income projections will stand much scrutiny either. They are bleeding phone and internet customers daily. They are losing both residential and business to Wireless,Time Warner, GWI, Vonage, and other providers. The 3 - Ring Binder project will further decrease revenues from fiber leases, and they will lose their phone service and internet contracts with large State Agencies/Institutions, as other companies utilize the binder fibers.
I think it is safe to say landline POTS (Plain Old Phone Service), is going the way of the dinosaur.
well today i got a certified letter from my primary health provider giving me hell that i asked her and another physician help me secure a medical emergency from fairpoint who was threatening to disconnect me the second time last year i spent 4 weeks without phone service i had serious health issues high blood pressure and heart failure was admitted 4 different times to emmc while i was disconected i was cut off from the outside world was not able to get around because of lymphedema in my legs and shortness of breath from my heart failure wasnt able to contac people for every day needs like transportation call for heating oil go shopping for groceries i need BASIC service for that . this was when they took over from verizon this year was the bankrupcy they try to disconnect me again i still have the same issues she didnt want SOCIETY having to pay my bills. fairpoint is trying to manipulate my doctors i resent that 911 service is not enough for me she is more worried about SOCIETY then me
Fairpoint,Verizon, what ever names you want to use,...all of them are just blood suckers. bring back the eight dollar a month phone bills and hec with a phone that does everything except part your hair. What was wrong with ring-ring hello. Now its ring tones,photos,spam,...etc..everything but.
So Fairpoint can enjoy their bankrupt deals..and Verizon can,t even speak straight english, call their service number if you are able to sort out the mixed language spoken on the other end.