Frontier Communications says closing of Verizon transaction on track

By Jennifer Lanning Drey

Portland, Ore., April 14 - Frontier Communications Corp. is on track to close its "massively deleveraging" merger with a company to be spun out of Verizon Communications' northern and western operations at the end of the second quarter, David Whitehouse, Frontier's treasurer, said Wednesday during a presentation at the Goldman Sachs Inaugural Technology, Media & Telecom Leveraged Finance Conference in New York.

Frontier closed on the $3.2 billion of financing in connection with the transaction earlier in the week, he said.

Upon closing of the transaction, Frontier's leverage ratio will drop to below 3 times from roughly 4 times. Post synergies and merger integration, the company expects to achieve a leverage ratio of less than 2.5 times.

Accordingly, any residual cash flow will be applied toward achieving that objective in the near term, Whitehouse said.

Once achieved, if the company is comfortable with its metrics and capital structure, it will consider other uses of cash, which could include share repurchases and potential industry-consolidating transactions, he said.

During his presentation, Whitehouse also noted that Frontier was previously comfortable with its higher leverage but realized its vulnerability during 2008.

"We came through unscathed, but we also realized that if we wanted to get bigger, we needed better scale and better access to the capital markets, and delevering and getting ourselves some more financial flexibility was certainly a way to operate more effectively," he said.

Frontier is a Stamford, Conn.-based communications company.

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