FairPoint Communications 2007 Annual Report Download - page 28

Table of Contents
loss carryforwards, and other factors requiring us to pay cash taxes in the future, would reduce the funds available to service our debt
and pay dividends.
 
 
After the merger’s completion, our current stockholders will, in the aggregate, own a significantly smaller percentage of the
Company than they will own immediately prior to the merger. Following completion of the merger and prior to the elimination of fractional
shares, our stockholders immediately prior to the merger collectively will own approximately 40% of the Company on a fully-diluted basis
(excluding treasury stock, certain specified options, restricted stock units, restricted units and certain restricted shares outstanding as of
the date of the merger agreement). Consequently, our current stockholders, collectively, will be able to exercise less influence over the
management and policies of the Company than they could exercise immediately prior to the merger. In addition, Verizon has exercised its
right to designate four of the nine members of our board of directors following the merger.
 
The market price of our common stock may fluctuate widely as a result of various factors, such as period-to-period fluctuations in
our operating results, the volume of sales of our common stock, developments in the communications industry, the failure of securities
analysts to cover our common stock or changes in financial estimates by analysts, competitive factors, regulatory developments,
economic and other external factors, general market conditions and market conditions affecting the stock of communications companies
in particular. Communications companies have in the past experienced extreme volatility in the trading prices and volumes of their
securities, which has often been unrelated to operating performance. High levels of market volatility may have a significant adverse effect
on the market price of our common stock. In addition, in the past, securities class action litigation has often been instituted against
companies following periods of volatility in their stock prices. This type of litigation could result in substantial costs and divert
management’s attention and resources.
  

Future sales, or the availability for sale in the public market, of substantial amounts of our common stock could adversely affect
the prevailing market price of our common stock, and could impair our ability to raise capital through future sales of equity securities.
The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market
or the perception that these sales could occur. These sales, or the possibility that these sales may occur, may also make it more difficult
for us to obtain additional capital by selling equity securities in the future at a time and at a price that we deem appropriate.
We may issue shares of our common stock, or other securities, from time to time as consideration for future acquisitions and
investments. In the event any such acquisition or investment is significant, the number of shares of our common stock, or the number or
aggregate principal amount, as the case may be, of other securities that we may issue may in turn be significant. We may also grant
registration rights covering those shares or other securities in connection with any such acquisitions and investments.
In connection with the merger, we will issue an estimated 53.8 million shares of our common stock to stockholders of Verizon. We
have registered the issuance of such shares pursuant to a registration statement filed with and declared effective by the SEC.
Immediately after the merger, prior to the elimination of fractional shares, Verizon stockholders will collectively hold approximately
60% of our common stock on a fully diluted basis (excluding treasury stock, certain specified options, restricted stock units, restricted
units and certain restricted shares outstanding as of the date of the merger agreement). Currently, Verizon’s common stock is included in
index funds and exchange-traded funds tied to the Dow Jones Industrial Average and the Standard & Poor’s 500 Index. Because we are not
expected to be included in these indices at the time of the merger and may not meet the investing guidelines of
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