Restructuring Support Agreement Supported by
More Than 75% of Bondholders; Files Voluntary Chapter 11
Petitions to Implement Agreed-Upon Terms of Financial Restructuring
Plan
Continuing to Provide Uninterrupted Service to
Customers across the U.S.; Trade Vendors Unimpaired for Pre-
and Post-Petition Obligations
Plan Expected to Reduce Debt by More Than $10
Billion
Secures Commitments for $460 Million in
Debtor-in-Possession Financing; Combined with Cash on Hand Totals
Over $1.1 Billion in Liquidity
Frontier Communications Corporation (NASDAQ: FTR) (“Frontier” or
the “Company”) today announced that, together with its
subsidiaries, it has entered into a Restructuring Support Agreement
(“RSA”) with bondholders representing more than 75% of Frontier’s
approximately $11 billion in outstanding unsecured bonds (the
“Bondholders”). The RSA contemplates agreed-upon terms for a
pre-arranged financial restructuring plan (the “Plan”) that leaves
unimpaired all general unsecured creditors and holders of secured
and subsidiary debt. Under the RSA, the Bondholders have, subject
to certain terms and conditions, agreed to support implementation
of a Plan that is expected to reduce the Company’s debt by more
than $10 billion and provide significant financial flexibility to
support continued investment in its long-term growth. To implement
the Plan, the Company and its direct and indirect subsidiaries
voluntarily filed petitions under Chapter 11 of the United States
Bankruptcy Code in the Southern District of New York.
Frontier expects to continue providing quality service to its
customers without interruption and work with its business partners
as usual throughout the court-supervised process. The Company has
sufficient liquidity to meet its ongoing obligations. Under the
RSA, trade vendors will be unimpaired for both pre- and
post-petition obligations.
“We are undertaking a proactive and strategic process with the
support of our Bondholders to reduce our debt by over $10 billion
on an expedited basis. We are pleased that constructive engagement
with our Bondholders over many months has resulted in a
comprehensive recapitalization and restructuring. We do not expect
to experience any interruption in providing services to our
customers,” said Robert Schriesheim, Chairman of the Finance
Committee of the Board of Directors. “With a recapitalized balance
sheet, we will have the financial flexibility to reposition the
Company and accelerate its transformation by allocating capital
resources and adding talent to enhance our service offerings to our
customers while optimizing value for our stakeholders. Under the
RSA, our trade vendors will be paid for goods and services provided
both before and after the filing date.”
“With this agreement with our Bondholders, we can now focus on
executing our strategy to drive operational efficiencies and
position our business for long-term growth,” said Bernie Han,
President and Chief Executive Officer. “At the same time, the
COVID-19 pandemic continues to impact the entire business
community, and our team is focused on ensuring the health and
safety of our employees and customers. The services we provide to
our customers keeps them connected, safe and informed, and I would
like to thank our team for their continued dedication, especially
in light of the current environment.”
In conjunction with the proposed financial restructuring,
Frontier received commitments for $460 million in
debtor-in-possession (“DIP”) financing. Following Court approval,
the Company’s liquidity will total over $1.1 billion comprising the
DIP financing and the Company’s more than $700 million cash on
hand. This liquidity, combined with cash flow generated by the
Company’s ongoing operations, is expected to be available and
sufficient to meet Frontier’s operational and restructuring needs.
The DIP financing agreement provides for the additional financing
to convert to a revolving exit facility upon emergence.
In addition, the Company intends to proceed with the sale of its
Washington, Oregon, Idaho, and Montana operations and assets to
Northwest Fiber for $1.352 billion in cash, subject to certain
closing adjustments, on or around April 30, 2020, and will seek
Court approval to complete the transaction on an expedited
basis.
In conjunction with the Chapter 11 filing, Frontier will file a
number of customary first day motions with the Bankruptcy Court.
These motions will allow the Company to continue to operate in the
normal course of business without interruption or disruption to its
relationships with its customers, vendors and employees. The
Company expects to receive Court approval for these requests.
Additional Information
Additional information regarding Frontiers’ financial
restructuring is available at www.frontierrestructuring.com. Court
filings and information about the claims process are available at
https://cases.primeclerk.com/ftr, by calling the Company’s claims
agent, Prime Clerk, toll-free at (877)-433-8020 or sending an email
to ftrinfo@primeclerk.com.
Kirkland & Ellis LLP is serving as legal advisor, Evercore
is serving as financial advisor and FTI Consulting, Inc. is serving
as restructuring advisor to the Company.
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a
variety of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure® digital
protection solutions.
Forward-Looking Statements
This press release contains “forward-looking statements” related
to future events. Forward-looking statements contain words such as
“expect,” “anticipate,” “could,” “should,” “intend,” “plan,”
“believe,” “seek,” “see,” “may,” “will,” “would,” or “target.”
Forward-looking statements are based on management’s current
expectations, beliefs, assumptions and estimates and may include,
for example, statements regarding the Chapter 11 cases, the DIP
financing, the anticipated sale of the Northwest Operations, the
Company’s ability to complete the financial restructuring and its
ability to continue operating in the ordinary course while the
Chapter 11 cases are pending. These statements are subject to
significant risks, uncertainties, and assumptions that are
difficult to predict and could cause actual results to differ
materially and adversely from those expressed or implied in the
forward-looking statements, including risks and uncertainties
regarding the Company’s ability to successfully complete a
reorganization process under Chapter 11, including: consummation of
the financial restructuring; potential adverse effects of the
Chapter 11 cases on the Company’s liquidity and results of
operations; the Company’s ability to obtain timely approval by the
bankruptcy court with respect to the motions filed in the Chapter
11 cases; objections to the Company’s financial restructuring, DIP
financing, or other pleadings filed that could protract the Chapter
11 cases; employee attrition and the Company’s ability to retain
senior management and other key personnel due to the distractions
and uncertainties; the Company’s ability to comply with the
restrictions imposed by the terms and conditions of the DIP
financing and other financing arrangements; the Company’s ability
to consummate the sale of the Northwest Operations during the
Chapter 11 Cases; the Company’s ability to maintain relationships
with suppliers, customers, employees and other third parties and
regulatory authorities as a result of the Chapter 11 filing; the
effects of the Chapter 11 cases on the Company and on the interests
of various constituents, including holders of the Company’s common
stock; the bankruptcy court’s rulings in the Chapter 11 cases,
including the approvals of the sale of the Northwest Operations,
the terms and conditions of the financial restructuring and the DIP
financing, and the outcome of the Chapter 11 cases generally; the
length of time that the Company will operate under Chapter 11
protection and the continued availability of operating capital
during the pendency of the Chapter 11 cases; risks associated with
third party motions in the Chapter 11 cases, which may interfere
with the Company’s ability to consummate the financial
restructuring or an alternative restructuring; increased
administrative and legal costs related to the Chapter 11 process;
potential delays in the Chapter 11 process due to the effects of
the COVID-19 virus; and other litigation and inherent risks
involved in a bankruptcy process. Forward-looking statements are
also subject to the risk factors and cautionary language described
from time to time in the reports the Company files with the U.S.
Securities and Exchange Commission, including those in the
Company’s most recent Annual Report on Form 10-K and any updates
thereto in the Company’s Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. These risks and uncertainties may cause actual
future results to be materially different than those expressed in
such forward-looking statements. Frontier has no obligation to
update or revise these forward-looking statements and does not
undertake to do so.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200414006129/en/
Investors: Sheldon Bruha Executive Vice President and
Chief Financial Officer SB7874@ftr.com Luke Szymczak 203-614-5044
Vice President, Investor Relations luke.szymczak@ftr.com
Media: Javier Mendoza 562-305-2345 Vice President, Corporate
Communications and External Affairs javier.mendoza@ftr.com Meaghan
Repko / Jed Repko Joele Frank Wilkinson Brimmer Katcher
212-355-4449
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