Frontier Communications 2009 Annual Report Download - page 14

will be consummated on the terms or timeline currently contemplated, or at all. We have and will continue to
expend a significant amount of capital and management’s time and resources on the Verizon Transaction, and a
failure to consummate the transaction as currently contemplated, or at all, could have a material adverse effect
on our business and results of operations. In addition, Spinco may (with Frontier’s consent and participation)
choose to raise all or a portion of the financing required to complete the Verizon Transaction described above
prior to the closing of the Verizon Transaction. If Spinco does so, and if the Verizon transaction is ultimately
not consummated or is delayed for a significant period of time, we could be obligated to pay significant interest
expense and other costs in connection with the financing without ever achieving the expected benefits of the
Verizon Transaction. The trading price of our securities could be adversely affected if the Verizon Transaction
is not consummated as currently contemplated, or at all.
Frontier’s effort to combine Frontier’s business and the Spinco business may not be successful.
The acquisition of the Spinco business is the largest and most significant acquisition Frontier has
undertaken. Our management will be required to devote a significant amount of time and attention to the
process of integrating the operations of Frontier’s business and the Spinco business, which may decrease the
time it will have to serve existing customers, attract new customers and develop new services or strategies. We
expect that the Spinco business will operate on an independent basis, separate from Verizon’s other businesses
and operations, immediately prior to the closing of the merger (other than with respect to the portion operated
in West Virginia, which is expected to be ready for integration into Frontier’s existing business at the closing of
the merger) and will not require significant post-closing integration for Frontier to continue the operations of
the Spinco business immediately after the merger. However, the size and complexity of the Spinco business and
the process of using Frontier’s existing common support functions and systems to manage the Spinco business
after the merger, if not managed successfully by management, may result in interruptions of the business
activities of the Company that could have a material adverse effect on the Company’s business, financial
condition and results of operations. In addition, management will be required to devote a significant amount of
time and attention before completion of the merger to the process of migrating the systems and processes
supporting the operations of the Spinco business in West Virginia from systems owned and operated by
Verizon to those owned and operated by Frontier. The size, complexity and timing of this migration, if not
managed successfully by management, may result in interruptions of Frontier’s business activities.
The Company may not realize the growth opportunities and cost synergies that are anticipated from the
merger.
The success of the merger will depend, in part, on the ability of the Company to realize anticipated growth
opportunities and cost synergies. The Company’s success in realizing these growth opportunities and cost
synergies, and the timing of this realization, depends on the successful integration of Frontier’s business and
operations and the Spinco business and operations. Even if the Company is able to integrate the Frontier and
Spinco businesses and operations successfully, this integration may not result in the realization of the full
benefits of the growth opportunities and cost synergies that Frontier currently expects from this integration
within the anticipated time frame or at all. For example, the Company may be unable to eliminate duplicative
costs, or the benefits from the merger may be offset by costs incurred or delays in integrating the companies.
After the close of the Verizon Transaction, sales of our common stock may negatively affect its market
price.
The market price of Frontier common stock could decline as a result of sales of Frontier common stock in
the market after the completion of the Verizon Transaction or the perception that these sales could occur.
Depending on the trading prices of Frontier common stock prior to the closing of the Verizon Transaction
and before accounting for (1) the elimination of fractional shares and (2) any additional shares that may be
issued as a result of amounts paid, payable or forgone by Verizon pursuant to orders or settlements that are
issued or entered into in order to obtain governmental approvals in the Spinco territory that are required to
complete the transaction (with the number of additional shares that may be issued under clause (2) above being
restricted by certain regulatory and other covenants and conditions to the transaction as agreed to by the
parties), Verizon stockholders will collectively own between approximately 66% and 71% of our outstanding
equity immediately following the closing of the transaction.
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES