Frontier Communications 2010 Annual Report Download - page 35

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The 2015 Notes have an interest rate of 7.875% per annum, the 2017 Notes have an interest rate of 8.25%
per annum, the 2020 Notes have an interest rate of 8.50% per annum and the 2022 Notes have an interest rate
of 8.75% per annum. The Senior Notes were issued at a price equal to 100% of their face value. In the third
quarter of 2010, we completed an exchange offer for the privately placed Senior Notes for registered notes.
Upon completion of the Merger, we also assumed additional debt of $250.0 million, including $200.0
million aggregate principal amount of 6.73% Senior Notes due February 15, 2028 and $50.0 million aggregate
principal amount of 8.40% Senior Notes due October 15, 2029.
On October 1, 2009, we completed a registered debt offering of $600.0 million aggregate principal amount
of 8.125% senior unsecured notes due 2018. The issue price was 98.441% of the principal amount of the notes,
and we received net proceeds of approximately $578.7 million from the offering after deducting underwriting
discounts and offering expenses. We used the net proceeds from the offering, together with cash on hand
(including cash proceeds from our April 2009 debt offering described below), to finance a cash tender offer for
our outstanding 9.250% Senior Notes due 2011 (the 2011 Notes) and our outstanding 6.250% Senior Notes due
2013 (the 2013 Notes), as described below.
On April 9, 2009, we completed a registered offering of $600.0 million aggregate principal amount of
8.25% senior unsecured notes due 2014. The issue price was 91.805% of the principal amount of the notes. We
received net proceeds of approximately $538.8 million from the offering after deducting underwriting discounts
and offering expenses. We used the net proceeds from the offering to repurchase outstanding debt, as described
below.
On March 28, 2008, we borrowed $135.0 million under a senior unsecured term loan facility that was
established on March 10, 2008. The loan matures in 2013 and bears interest based on the prime rate or London
Interbank Offered Rate (LIBOR), at our election, plus a margin which varies depending on our debt leverage
ratio. We used the proceeds to repurchase, during the first quarter of 2008, $128.7 million principal amount of
the 2011 Notes and to pay for the $6.3 million of premium on early retirement of those notes.
Debt Reduction
In 2010, we retired an aggregate principal amount of $7.2 million of debt, consisting of $2.8 million of
senior unsecured debt and $4.4 million of rural utilities service loan contracts.
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.
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).
34
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES