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FairPoint phone files for Chapter 11 bankruptcy
PORTLAND, Maine (AP) -- FairPoint Communications Inc. filed for Chapter 11 bankruptcy protection Monday barely 18 months after becoming northern New England's dominant telecommunications company, fulfilling critics' predictions that the company wasn't up to the task.
The company said it voluntarily filed for bankruptcy after agreeing on a deal with key lenders that would lower its debt by about 62 percent.
FairPoint, based in Charlotte, N.C., owns and operates phone companies in 18 states with a total of 1.65 million lines. Its largest holdings are in Maine, New Hampshire and Vermont, where it bought Verizon Communications Inc.'s land lines and Internet network for $2.3 billion in 2008.
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The bankruptcy filing was widely anticipated as the company has negotiated with banks and bondholders to restructure its debt.
The restructuring deal with lenders holding more than half of its outstanding secured debt will allow the company to reduce its debt from $2.7 billion to $1 billion, CEO David Hauser told The Associated Press.
"What that will do is cause a significant decrease in costs to the company because interest expenses will drop a lot," Hauser said.
The plan is subject to approval by the U.S. Bankruptcy Court in the Southern District of New York.
Hauser said the bankruptcy filing will not affect the company's day-to-day operations or its efforts to expand its high-speed Internet network in northern New England.
"From a customer point of view, this is a nonevent," he said.
Monday's filing prompted the New York Stock Exchange to suspend trading in the company's stock. The company was notified last month that its stock could be removed from the exchange because the price had fallen below $1 a share for 30 consecutive trading days.
Regulators and politicians said they would look out for the interests of FairPoint's customers and workers. The regulatory boards in Maine and New Hampshire said they have hired bankruptcy specialists to help during the process. Staff members from the three states' regulatory boards planned to meet with FairPoint's management and staff on Monday.
