Vermont regulators accept FairPoint’s revised bankruptcy plan

first_imgVermont PSB rejects FairPoint bankruptcy plan | Vermont Business … Jun 29, 2010 … FairPoint filed for bankruptcy protection in October 2009 and hoped to emerge from it sometime this fall. The PSB noted that the debt relief … Consolidated Communications,The Vermont Public Service Board on December 23 accepted FairPoint Communications’ revised bankruptcy plan. The board last June rejected the plan in large part because it was not satisfied with the company’s financial structure and because of the company’s request to delay deployment of some of its broadband obligations under the original agreement. FairPoint refiled its application. The PSB then accepted it without conditions. On December 27, FairPoint petitioned the US Bankruptcy Court to release it from its Chapter 11 protection to allow the restructuring to move forward. In essence, FairPoint will sell the company to its creditors, which will reduce its debt from $2.7 billion to $1 billion.Vermont was the last of the three states to give final approval to FairPoint. Maine and New Hampshire regulators approved the plan last summer. The Vermont PSB wrote on December 23:”In this Order, we grant the regulatory approvals that FairPoint seeks, without conditions.The Revised Forecast, and the changes to the Credit Agreement that resulted, demonstrate areasonable likelihood that FairPoint will be financially capable and can thereby fulfill itsobligations under the Certificates of Public Good (“CPG”) that we issued in Docket No. 7270.We also find that modification of those CPGs and approval of the Settlement with theDepartment will promote the general good. “It went on to say:”Our conclusion that we should now grant the regulatory approvals FairPoint has requested is based largely upon the Revised Forecast and changes to the Credit Agreement. The evidence makes clear that these are not merely cosmetic adjustments. As characterized by FairPoint’s Chief Financial Officer, the June Order gave FairPoint an opportunity which it embraced. The result is a Revised Forecast that is more realistic and more accurate ‘ more in line with what is, rather than what FairPoint would like the future revenues and costs to be. FairPoint considers the projections in the Revised Forecast, which forecast EBITDAR to be 40 percent below the levels projected in the original plan, to be “much more reasonable.” The recent performance for FairPoint has been in line with the Revised Forecast. The Department echoes this assessment, finding both the revenue and cost forecasts in the Revised Forecast to be more conservative and more realistic. The Department adds that the Revised Forecast led to “a much better financing deal for the Company.”The PSB added in regards to the broadband delay:”As we are now persuaded that FairPoint is likely to be financially viable, we can concludethat FairPoint will be able to fulfill its regulatory commitments and, more importantly, itscommitments to its customers to provide high-quality service and expand broadband service tomany customers that have no availability of high-speed services. We are mindful that approvalof the Regulatory Settlement will have some adverse affects upon Vermont consumers.Ratepayers must forego a substantial refund that they are owed by FairPoint for the substandardservice quality they have received since the February 2009 cutover from the operational supportsystems of FairPoint’s predecessor, Verizon New England, Inc., d/b/a Verizon Vermont(“Verizon”), to FairPoint’s newly designed systems. FairPoint may delay broadband expansionin some presently unserved areas by six months (and for some customers, longer). As part of anoverall resolution of FairPoint’s bankruptcy that leaves the Company financially stable, we acceptthese negative impacts, as difficult, but unavoidable costs.”FairPoint maintains that the delay in deployment of some broadband services is a result of an upgrade to the system that will ultimately provide customers with better service.FairPoint’s Vermont President Michael Smith submitted this statement in regards to the PSB ruling:‘We recognize the Board’s diligence in reviewing all of the facts regarding our request for Change of Control and Regulatory Settlement, which are two of the final steps in our financial reorganization.‘FairPoint already has received approvals from Maine and New Hampshire regulators, our creditors, represented employees and other states where we do business and approval was required. The Federal Communications Commission has also approved crucial aspects of FairPoint’s financial reorganization.‘It is my expectation that FairPoint will return to the US Bankruptcy Court shortly, and following that we will be able to emerge from Chapter 11.‘The telecommunications industry has changed dramatically over the past decade and the current level of industry competition provides both business and residential consumers with multiple choices and technologies. Upon emergence from Chapter 11, FairPoint will be a stronger and more viable provider of wireline telephone services and high speed data solutions.‘Even while undergoing Chapter 11 reorganization, FairPoint has invested almost $47 million in high-speed Internet in Vermont ‘ bringing broadband to more Vermonters than all our competitors combined. More than 80 percent of the homes and businesses in FairPoint’s service area in Vermont now have high-speed Internet available from FairPoint, up from approximately 66 percent in 2008.’In an SEC filing on December 27, FairPoint stated:”As previously disclosed, on October 26, 2009, FairPoint Communications, Inc. (the “Company”) and all of its direct and indirect subsidiaries filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) (Case No. 09-16335).”As a condition precedent to the effectiveness of the Company’s plan of reorganization under the Bankruptcy Code, the Company needed to obtain certain regulatory approvals from various regulatory authorities, including the Vermont Public Service Board (the “Vermont Board”). The Vermont Board did not initially provide its requisite approval. The Company made efforts to address certain issues that were raised by the Vermont Board and submitted a renewed request for the Vermont Board to provide its approval. On December 23, 2010, the Vermont Board entered an order providing its requisite approval.”Having obtained the Vermont Board’s approval, on December 27, 2010, the Company filed with the Bankruptcy Court a motion, among other things, (i) requesting approval of a form of supplemental disclosure to the creditors of the Company (a form of such supplemental disclosure is attached as an exhibit to the motion) and (ii) scheduling a continuation of the hearing on the confirmation of the Joint Plan of Reorganization of FairPoint Communications, Inc. A copy of the motion as filed with the Bankruptcy Court is available at www.fprestructuring.com(link is external) under the “Court Filings” link.”FairPoint Communications, Inc, based in North Carolina, is an industry leading provider of communications services to communities across the country. Today, FairPoint owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. www.FairPoint.com(link is external).RELATED STORIES: Video Q&A: Michael Smith, Vermont President FairPoint … Aug 18, 2010 … FairPoint Communications has asked the Vermont Public Service Board to reconsider its rejection of FairPoint’s bankruptcy plan. …last_img

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