FairPoint Communications 2004 Annual Report Download - page 92

SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a
financing cash flow, rather than as an operating cash flow as required under current literature. The Company expects to adopt
the provisions of SFAS No. 123(R) on a modified prospective application method effective July 1, 2005, with no restatement of
any prior periods. SFAS No. 123(R) is effective for the Company as of the beginning of the first interim reporting period that
begins after June 15, 2005.
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On February 8, 2005, FairPoint completed its initial public offering (the Offering) of 25 million shares of common stock at a price
to the public of $18.50 per share for net proceeds of approximately $434.8 million. Concurrently with the Offering, FairPoint entered
into a new senior secured credit facility of approximately $688.5 million.
These proceeds were used to:
•Repay in full all outstanding loans under FairPoint's old credit facility,
•Consummate tender offers and consent solicitations for the outstanding $115.2 million aggregate principal amount of
91/2% senior subordinated notes due 2008, (the 91/2% notes), the outstanding $75.0 million aggregate principal
amount of floating rate callable securities due 2008 (the floating rate notes), the outstanding $193.0 million aggregate
principal amount of 121/2% senior subordinated notes due 2010 (the 12 1/2% notes), and the outstanding
$225.0 million aggregate principal amount of 117/8% senior notes due 2010 (the 117/8% notes),
•Repurchase all of the series A preferred stock subject to mandatory redemption,
•Repay a substantial portion of the subsidiaries' outstanding long-term debt,
•Repay in full a $7.0 million unsecured promissory note issued in connection with a past acquisition,
•Repurchase common stock subject to put option, net of the settlement of $1,000 payment of notes receivable—related
party,
•Pay a long-term deferred transaction fee, and
•Pay related fees and expenses.
(a) Issuance of Common Stock
On January 28, 2005, the board of directors approved a 5.2773714 for 1 reverse stock split of the Company's common
stock, which has been given retroactive effect in the accompanying financial statements. In conjunction with the Offering, the
Company reclassified all of its outstanding shares of class A and class C common stock into common stock and converted all
of its outstanding shares of class C common stock into shares of common stock, of which 200 million shares are authorized.
After the stock split, but prior to the issuance of any new shares, 9,451,719 shares of common stock were outstanding. All
common stock issued and outstanding has a $0.01 par value.
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