Frontier Communications 2012 Annual Report Download - page 36

Upon completion of the Transaction on July 1, 2010, we entered into a supplemental indenture with The
Bank of New York Mellon, as Trustee, pursuant to which we assumed the obligations under the senior notes.
The senior notes were recorded at their fair value on the date of acquisition, which was $3.2 billion.
The senior notes consisted of $500.0 million aggregate principal amount of Senior Notes due 2015 (the
2015 Notes), $1.1 billion aggregate principal amount of Senior Notes due 2017 (the 2017 Notes), $1.1 billion
aggregate principal amount of Senior Notes due 2020 (the 2020 Notes) and $500.0 million aggregate principal
amount of Senior Notes due 2022 (the 2022 Notes).
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 Transaction, 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.
Credit Facility
We have a $750.0 million revolving credit facility. As of December 31, 2012, we had not made any
borrowings under this facility. The terms of the credit facility are set forth in the credit agreement (the
Revolving Credit Agreement), dated as of March 23, 2010, among the Company, the Lenders party thereto, and
JPMorgan Chase Bank, N.A., as Administrative Agent. Associated facility fees under the credit facility will
vary from time to time depending on the Company’s credit rating (as defined in the Revolving Credit
Agreement) and were 0.625% per annum as of December 31, 2012. The credit facility is scheduled to terminate
on January 1, 2014. During the term of the credit facility, the Company may borrow, repay and reborrow funds,
and may obtain letters of credit, subject to customary borrowing conditions. Loans under the credit facility will
bear interest based on the alternate base rate or the adjusted LIBOR rate (each as determined in the Revolving
Credit Agreement), at the Company’s election, plus a margin specified in the Revolving Credit Agreement
based on the Company’s credit rating. Letters of credit issued under the credit facility will also be subject to
fees that vary depending on the Company’s credit rating. The credit facility is available for general corporate
purposes but may not be used to fund dividend payments.
Letter of Credit Facility
We also have a $40.0 million unsecured letter of credit facility, as amended. The terms of the letter of
credit facility are set forth in a credit agreement, dated as of September 8, 2010, among the Company, the
Lenders party thereto, and Deutsche Bank AG, New York Branch (the Bank), as Administrative Agent and
Issuing Bank (the Letter of Credit Agreement). An initial letter of credit for $190 million was issued to the
West Virginia Public Service Commission to guarantee certain of our capital investment commitments in West
Virginia in connection with the Transaction. The initial commitments under the Letter of Credit Agreement
expired on September 20, 2011, with the Bank exercising its option to extend $100.0 million of the
commitments to September 20, 2012. On September 11, 2012, the Company entered into an amendment to the
Letter of Credit Agreement to extend $40 million of the commitments to September 20, 2013. Two letters of
credit, one for $20 million expiring March 2013 and the other for $20 million expiring September 2013, were
issued on September 13, 2012. The Company is required to pay an annual facility fee on the available
commitment, regardless of usage. The covenants binding on the Company under the terms of the amended
Letter of Credit Agreement are substantially similar to those in the Company’s other credit facilities, including
limitations on liens, substantial asset sales and mergers, subject to customary exceptions and thresholds.
Covenants
The terms and conditions contained in our indentures, the Credit Agreement, the Revolving Credit
Agreement and the Letter of Credit Agreement include the timely payment of principal and interest when due,
the maintenance of our corporate existence, keeping proper books and records in accordance with U.S. GAAP,
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES