Frontier Communications 2007 Annual Report Download - page 27

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
with respect to the first quarter debt exchanges, a non-cash pre-tax loss of approximately $2.4 million was
recognized in accordance with EITF No. 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt
Instruments,” which is included in other income (loss), net.
On June 1, 2006, we retired at par our entire $175.0 million principal amount of 7.60% Debentures due
June 1, 2006. On June 14, 2006, we repurchased $22.7 million of our 6.75% Senior Notes due August 17, 2006 at
a price of 100.181% of par. On August 17, 2006, we retired at par the $29.1 million remaining balance of the
6.75% Senior Notes.
For the year ended December 31, 2005, we retired an aggregate principal amount of $36.4 million of debt,
including $30.0 million of EPPICS that were converted into our common stock. During the second quarter of
2005, we entered into two debt-for-debt exchanges of our debt securities. As a result, $50.0 million of our
7.625% notes due 2008 were exchanged for approximately $52.2 million of our 9.00% notes due 2031. The
9.00% notes are callable on the same general terms and conditions as the 7.625% notes exchanged. No cash was
exchanged in these transactions, however a non-cash pre-tax loss of approximately $3.2 million was recognized
in accordance with EITF No. 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments,”
which is included in other income (loss), net.
We may from time to time repurchase our debt in the open market, through tender offers, exchanges of debt
securities, by exercising rights to call or in privately negotiated transactions. We may also exchange existing debt
for newly issued debt obligations.
Issuance of Debt Securities
On March 23, 2007, we issued in a private placement an aggregate $300.0 million principal amount of
6.625% Senior Notes due 2015 and $450.0 million principal amount of 7.125% Senior Notes due 2019. Proceeds
from the sale were used to pay down $200.0 million principal amount of indebtedness incurred on March 8, 2007
under a bridge loan facility in connection with the acquisition of Commonwealth and redeem, on April 26, 2007,
$495.2 million principal amount of our 7.625% Senior Notes due 2008. In the second quarter of 2007, we
completed an exchange offer (to publicly register the debt) on the $750.0 million in total of private placement
notes described above, in addition to the $400.0 million principal amount of 7.875% Senior Notes issued in a
private placement on December 22, 2006, for registered notes.
On December 22, 2006, we issued in a private placement, $400.0 million principal amount of 7.875%
Senior Notes due January 15, 2027. Proceeds from the sale were used to partially finance our acquisition of
Commonwealth.
In December 2006, we borrowed $150.0 million under a senior unsecured term loan agreement. The loan
matures in 2012 and bears interest based on an average prime rate or London Interbank Offered Rate, or LIBOR,
at our election plus a margin which varies depending on our debt leverage ratio. We used the proceeds to
partially finance our acquisition of Commonwealth.
EPPICS
As of December 31, 2007, we have only $4.0 million of EPPICS related debt outstanding to third parties.
The following disclosure provides the history regarding this issuance.
In 1996, our consolidated wholly owned subsidiary, Citizens Utilities Trust (the Trust), issued, in an
underwritten public offering, 4,025,000 shares of 5% Company Obligated Mandatorily Redeemable Convertible
Preferred Securities due 2036 (Trust Convertible Preferred Securities or EPPICS), representing preferred
undivided interests in the assets of the Trust, with a liquidation preference of $50 per security (for a total
liquidation amount of $201.3 million). These securities have an adjusted conversion price of $11.46 per share of
our common stock. The conversion price was reduced from $13.30 to $11.46 during the third quarter of 2004 as a
result of the $2.00 per share of common stock special, non-recurring dividend. The proceeds from the issuance of
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