FairPoint Communications 2007 Annual Report Download - page 8

Table of Contents
prior to December 31, 2008, 5:00:1:00 for any fiscal quarter ending after December 31, 2008 and on or prior to December 31, 2009 and
4.50:1.00 for any fiscal quarter ending thereafter; (v) prohibits us from paying dividends on or repurchasing our common stock if (1) our
total leverage ratio exceeds 4.50:1:00 (previously 5.25:1.00) on the dividend calculation date and/or (2) our cash on hand is less than
$20 million (previously $10 million); (vi) provides for an amount equal to 75% of the increase in our cumulative distributable cash as of
the last day of each fiscal quarter to be applied as a mandatory repayment of the principal amount of outstanding B term loans under our
existing credit facility (or an amount equal to 50%, if our leverage ratio is less than or equal to 5.25:1.00); (vii) provides for more
restrictive negative covenants, minimum liquidity requirements and increased mandatory prepayments from proceeds of debt and equity
issuances; (viii) provides for acceleration of the maturity of the borrowings under our existing credit facility to June 30, 2009 if certain
vendor debt incurred by us in connection with the merger is outstanding as of such date and has a mandatory payment date on or prior to
the maturity of the borrowings under our existing credit facility as of such date; (ix) prohibits us from incurring additional obligations
related to the merger after March 31, 2008; provided that we may make cash expenditures not to exceed $20 million in the aggregate from
the proceeds of equity issuances or if we have received a reimbursement obligation from Verizon or another third party acceptable to the
lenders under our existing credit facility and certain other conditions are satisfied; (x) provides for higher interest rate margins (3.00% on
base rate loans and 4.00% on Eurodollar loans), a Eurodollar rate floor of 2.50% and repayment premiums payable during the two year
period beginning on May 1, 2008 upon certain repayments of borrowings under our existing credit facility, which provisions would
become effective as of May 1, 2008 if our existing credit facility has not been repaid in full on or prior to such date; and (xi) provides for
higher interest rate margins (5.00% on base loans and 6.00% on Eurodollar loans), a Eurodollar rate floor of 3.25%, which provisions
would become effective as of January 1, 2009 if our existing credit facility has not been repaid in full on or prior to such date. We paid the
lenders an amendment fee of $1.7 million in connection with the fifth amendment. We have also agreed to pay additional fees of 0.25%,
1.5% and 2.5% of the aggregate amount of all outstanding term loans and revolving commitments of the lenders outstanding on the
effective date of the fifth amendment to the lenders under the existing credit facility on April 1, 2008, May 1, 2008 and January 1, 2009,
respectively, if our existing credit facility is not repaid in full on or prior to such dates.
We anticipate that we will not be permitted to pay dividends on our common stock pursuant to our existing credit facility as
amended by the fifth amendment; provided that we would be permitted to declare a dividend at any time prior to April 30, 2008 so long as
the payment of such dividend is expressly subject to the consummation of the merger and related transactions and we have repaid in full
all of the obligations owing under the existing credit facility.
Our management believes that the fifth amendment to our existing credit facility was necessary to avoid events of default relative to
certain covenants as of March 31, 2008, assuming the closing of the merger does not occur on or before March 31, 2008.
We intend to repay our existing credit facility in full in connection with the closing of the transactions and, accordingly, the
provisions contained in the fifth amendment to our existing credit facility, including those restricting the payment of dividends, would
terminate as a result of such repayment and no longer be effective. However, there can be no assurance that the transactions will be
consummated.
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We offer a broad portfolio of high-quality communications services for residential and business customers in each of the markets in
which we operate. We have a long history of operating in our markets and have a recognized identity within each of our service areas. Our
companies are locally staffed, which enables us to efficiently and reliably provide an array of communications services to meet our
customer needs. These include services traditionally associated with local telephone companies, as well as other services such as long
distance, Internet and broadband enabled services. Based on our understanding of our local customers’ needs, we have attempted to be
proactive by offering bundled services designed to simplify the customer’s purchasing and management process.
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