понедельник, 30 мая 2011 г.

Moody

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Moody’s cut the Charlotte-based company’s rating to Caa2 from B3. The agencyt also lowered FairPoint’s rating to negative from FairPoint’s ratings on its secured and unsecured debt alsowere lowered. Moody’d says the downgrade is based on “Moody’s expectation of a high defaulft probability anda lower, though still above-average, estimatefd recovery rate across all debt The agency says its decisionm follows the telecommunication company’s announcement last week that it was launchingv a private exchange offer for its outstanding 13.125 percentf senior notes due in 2018.
FairPoint said the offet was designed primarily to reducethe company’d second- and third-quarter interest expenses. It also will help keep the companyt in compliance with its senior secured creditfacility agreement. FairPoinft said it believes the exchanges offer is critical to itscontinuede viability. The company is workingb with its financial adviser to evaluate itscapita structure. Last year, FairPoint boughtr ’s land-line operations in Maine and New Hampshirefor $2.3 billion.
The deal made FairPointf (NYSE:FRP) the country’s eighth-largest telephone But FairPoint took on substantial debt to do the and the integration did not go Problems in converting billingto FairPoint’s system from Verizon’ led to slow collections and frustrated customers. Phonre and e-mail service problems cropped up across the new And regulators in the region expressed dissatisfactionm with some ofthe operations. Durin g the first quarter, FairPoint drew $50 million undere its $170 million credit facility. As of March 31, only $4.7 million remainexd available to borrow. The company says liquidity remainea problem.
In addition, cash collections have remained beloew the levels it had before switching Verizon customerd to theFairPoint system. Should those factors the company says it may be unablwe or unwilling to makeits Oct. 1 interesgt payment on the notes, whichb could constitute a default. The exchange offer expirews July 22. Two weeks ago, Chief Financialk Officer and FairPoint board membet David Hauser announced he would retirefrom Charlotte-baseds Duke (NYSE:DUK) and becomr FairPoint’s chief executive and He will assume his new responsibilitiex upon Gene Johnson’s retirement as FairPoint chairman and CEO on Johnson, a co-founder of previously announced his plans to He has been the company’s chiefd executive since 2002.
Hauser has been a member of FairPoint’s board since February 2005, servinyg as a director, chairman of the compensation committee and a memberf of theaudit committee. “While it is gratifyin g to be named chairman and CEO of this longstanding I am very aware of the operationapl and financial concerns surroundingthe company,” Hauseer says. “My primary focus will be to address these concerns in quick succession and empower our team to seek andimplemeny solutions. There is a lot of work to be and I am looking forward togettingb started.

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