FairPoint emerges from Chapter 11 bankruptcy; plan effective Jan. 24

By Lisa Kerner

Charlotte, N.C., Jan. 24 - FairPoint Communications, Inc. announced its emergence from Chapter 11 following the successful restructuring of its balance sheet.

The company said it reduced its outstanding debt by approximately 64%, to about $1 billion, from about $2.8 billion.

FairPoint has a $75 million revolving credit facility available for working capital and general corporate purposes.

"We are emerging as a stronger company, focused on our customers, vendors and employees," said chief executive officer Paul Sunu.

FairPoint also announced a new board of directors whose members include Sunu, chairman Edward D. Horowitz, Todd Arden, Dennis J. Austin, Michael J. Mahoney, Michael K. Robinson, David Treadwell and Wayne Wilson.

The U.S. Bankruptcy Court for the Southern District of New York confirmed the company's plan of reorganization on Jan. 13, according to a Monday filing.

Holders of shares of FairPoint's old common stock will not receive or retain any distribution under the plan, a company news release said.

According to FairPoint, old common stock, which had been traded over-the-counter under the ticker FRCMQ, was cancelled and does not convert into new common stock.

FairPoint has received approval to list its common stock with the Nasdaq Stock Market and has reserved the ticker symbol FRP, with trading expected to begin shortly.

Creditor treatment

As previously reported, treatment of creditors under FairPoint's amended reorganization plan will include:

• Holders of other priority claims, legacy subsidiary unsecured claims, convenience claims and secured tax claims will be paid in full in cash;

• Other secured claims will either be reinstated, or holders will be paid in full in cash or receive the collateral securing the claim;

• Holders of pre-bankruptcy credit agreement claims will receive a share of the new term loan, a share of 23.62 million shares of common stock and a share of cash distributions;

• Holders of FairPoint unsecured claims will receive a share of 2.1 million shares of common stock, warrants to purchase an additional 7.16 million shares and a share of 45% of litigation trust interests if they voted to accept the plan and no distribution if they voted to reject it;

• Holders of subordinated securities claims and old FairPoint equity interests will receive no distribution; and

• Subsidiary equity interests will be reinstated.

FairPoint Communications provides communications services and is based in Charlotte, N.C. The company filed for bankruptcy on Oct. 26, 2009. Its Chapter 11 case number is 09-16335.

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