FairPoint Communications 2007 Annual Report Download - page 47

Table of Contents
by us in accordance with the terms of our new credit facility, (b) minus gains on asset sales and other extraordinary gains and all
non-cash gains and income accrued by us.
• We may not pay dividends if: (a) a default or event of default under our new credit facility has occurred and is continuing or
would exist after giving effect to such payment; (b) our leverage ratio is above 5.00 to 1.00; (c) we do not have at least
$25 million of cash on hand (including unutilized commitments under our new credit facility’s revolving facility); and (d) we do
not deliver an officer’s certificate on the date of the proposed dividend payment certifying that the Cumulative Distributable Cash
on such date exceeds the aggregate amount of the proposed dividend; provided that notwithstanding the foregoing restrictions, we
will be permitted to make regular quarterly dividends payable for the fiscal quarter in which the closing date occurs (which
payment may be made after the closing date) and the first and second full fiscal quarters following the closing date so long as the
aggregate amount of the dividend payments does not exceed $50 million.
Our new credit facility is also expected to permit us to use available cash to repurchase shares of our capital stock, subject to the
same conditions.
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The indenture governing the notes is expected to restrict our ability to pay dividends on our common stock as follows:
• So long as no event of default has occurred and is continuing under the indenture governing the notes, we may pay dividends in
an amount not to exceed $50.0 million in the aggregate for the first two quarterly dividend payments immediately following the
issue date of the notes; and
• So long as no default or event of default has occurred and is continuing under the indenture governing the notes and our
consolidated leverage ratio (as defined in the indenture governing the notes) is at least 5.00 to 1.00, we may pay dividends (other
than as contemplated by clause (1) above) in an amount not to exceed the sum of (i) our consolidated cash flow (as defined in the
indenture governing the notes) less 1.4 times our consolidated interest expense (as defined in the indenture governing the notes) for
the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the issue date of the
notes to the end of the Company’s most recently ended fiscal quarter for which financial statements are available, (ii) the net
proceeds received by the Company since the issue date of the notes as a contribution to its common equity capital or from the
issue or sale of equity interests and (iii) the proceeds received from certain investments.
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The parties to the merger have received orders, dated February 1, 2008, February 15, 2008 and February 25, 2008, of applicable
state regulatory authorities in Maine, Vermont and New Hampshire, respectively, in each case approving the transactions, subject to
certain conditions.
The orders issued by the state regulatory authorities in Maine, New Hampshire and Vermont provided for, among other things:
• a 35% reduction in the rate of dividends to be paid by us following the merger (as compared to the dividend rate paid by us since
our initial public offering in 2005), which could be effective for up to ten years following the merger unless we meet certain
financial conditions set forth in the orders, and we repay debt related to the merger until the termination of conditions date with
funds that would otherwise be available to pay dividends;
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