Frontier Communications 2009 Annual Report Download - page 38

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million in total of private placement notes described above, in addition to the $400.0 million principal amount
of 7.875% Senior Notes due 2027 issued in a private placement on December 22, 2006, for registered notes.
Debt Reduction
In 2009, we retired an aggregate principal amount of $1,048.3 million of debt, consisting of $1,047.3
million of senior unsecured debt, as described in more detail below, and $1.0 million of rural utilities service
loan contracts.
During the fourth quarter of 2009, the Company purchased and retired, in accordance with the terms of the
tender offer referred to above, approximately $564.4 million aggregate principal amount of the 2011 Notes and
approximately $83.4 million aggregate principal amount of the 2013 Notes. The aggregate consideration for
these debt repurchases was $701.6 million, which was financed with the proceeds of the October 2009 debt
offering and a portion of the proceeds of the April 2009 debt offering, each as described above. The
repurchases in the tender offer resulted in a loss on the early retirement of debt of approximately $53.7 million,
which we recognized in the fourth quarter of 2009.
In addition to the debt tender offer, we used $388.9 million of the April 2009 debt offering proceeds to
repurchase in 2009 $396.7 million principal amount of debt, consisting of $280.8 million of the 2011 Notes,
$54.1 million of our 7.875% Senior Notes due January 15, 2027, $35.9 million of the 2013 Notes, $16.0 million
of our 7.125% Senior Notes due March 15, 2019 and $9.9 million of our 6.80% Debentures due August 15,
2026. An additional $7.8 million net gain was recognized and included in Other income (loss), net in our
consolidated statements of operations for the year ended December 31, 2009 as a result of these other debt
repurchases.
As a result of these 2009 debt transactions described above, as of December 31, 2009, we had reduced our
debt maturities through 2013 to approximately $7.2 million maturing in 2010, $280.0 million maturing in 2011,
$180.4 million maturing in 2012 and $709.9 million maturing in 2013. We do not expect the Verizon
Transaction to change the amount of these near-term debt maturities.
In 2008, we retired an aggregate principal amount of $144.7 million of debt, consisting of $128.7 million
principal amount of the 2011 Notes, $12.0 million of other senior unsecured debt and rural utilities service loan
contracts, and $4.0 million of 5% Company Obligated Mandatorily Redeemable Convertible Preferred
Securities (EPPICS).
In 2007, we retired an aggregate principal amount of $967.2 million of debt, including $3.3 million of
EPPICS, and $17.8 million of 3.25% Commonwealth convertible notes that were converted into our common
stock. On April 26, 2007, we redeemed $495.2 million principal amount of our 7.625% Senior Notes due 2008
at a price of 103.041% plus accrued and unpaid interest. During the first quarter of 2007, we borrowed and
repaid $200.0 million utilized to temporarily fund the acquisition of Commonwealth, and we paid down in full
the $35.0 million Commonwealth credit facility. Through December 31, 2007, we retired $183.3 million face
amount of Commonwealth convertible notes for which we paid $165.4 million in cash and $36.7 million in
common stock. We also paid down $44.6 million of industrial development revenue bonds and $4.3 million of
rural utilities service loan contracts.
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 refinance
existing debt or exchange existing debt for newly issued debt obligations.
EPPICS
As of December 31, 2008 and 2009, there was no 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
36
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES