Frontier Communications 2013 Annual Report Download - page 79

On May 3, 2013, the Company entered into a new $750.0 million revolving credit facility (the Revolving
Credit Facility) and terminated the Company’s previously existing revolving credit facility. As of December 31,
2013, no borrowings had been made under the Revolving Credit Facility. The terms of the Revolving Credit
Facility are set forth in the credit agreement, dated as of May 3, 2013, among the Company, the Lenders party
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and the other parties named therein (the
Revolving Credit Agreement). Associated commitment fees under the Revolving Credit Facility will vary from
time to time depending on the Company’s debt rating (as defined in the Revolving Credit Agreement) and were
0.400% per annum as of December 31, 2013. The Revolving Credit Facility is scheduled to terminate on
November 3, 2016. During the term of the Revolving Credit Facility, the Company may borrow, repay and
reborrow funds, and may obtain letters of credit, subject to customary borrowing conditions. Loans under the
Revolving Credit Facility will bear interest based on the alternate base rate or the adjusted LIBO Rate (each as
determined in the Revolving Credit Agreement), at the Company’s election, plus a margin based on the
Company’s debt rating (ranging from 0.50% to 1.50% for alternate base rate borrowings and 1.50% to 2.50%
for adjusted LIBO Rate borrowings). The current pricing on this facility would have been 1.0% or 2.0%,
respectively, as of December 31, 2013. Letters of credit issued under the Revolving Credit Facility will also be
subject to fees that vary depending on the Company’s debt rating. The Revolving Credit Facility is available for
general corporate purposes but may not be used to fund dividend payments. The maximum permitted leverage
ratio is 4.5 times.
On September 8, 2010, the Company entered into a letter of credit facility, the terms of which are set forth
in the Credit Agreement with 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
$190.0 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 2010 Transaction. The initial commitments
under the Letter of Credit Agreement expired in September 2011, with the Bank exercising its option to extend
$100.0 million of the commitments to September 2012. In September 2012, the Company entered into an
amendment to the Letter of Credit Agreement to extend $40 million of the commitments. Two letters of credit
were issued in September 2012, one for $20 million that expired in March 2013, and the other for $20 million
that expired in September 2013. The Letter of Credit Agreement expired on September 20, 2013.
On April 10, 2013, the Company completed a registered debt offering of $750.0 million aggregate
principal amount of 7.625% senior unsecured notes due 2024, issued at a price of 100% of their principal
amount. We received net proceeds of $736.9 million from the offering after deducting underwriting fees. The
Company used the net proceeds from the sale of the notes, together with cash on hand, to finance the cash
tender offers discussed below.
On April 10, 2013, the Company accepted for purchase $471.3 million aggregate principal amount of its
senior notes tendered for total consideration of $532.4 million, consisting of $194.2 million aggregate principal
amount of the Company’s 6.625% senior notes due 2015 (the March 2015 Notes), tendered for total
consideration of $216.0 million, and $277.1 million aggregate principal amount of the Company’s 7.875%
senior notes due 2015 (the April 2015 Notes), tendered for total consideration of $316.4 million. On April 24,
2013, the Company accepted for purchase $0.7 million aggregate principal amount of the March 2015 Notes,
tendered for total consideration of $0.8 million, $0.8 million of the April 2015 Notes, tendered for total
consideration of $0.9 million, and $225.0 million aggregate principal amount of the Company’s 8.250% senior
notes due 2017 (the 2017 Notes), tendered for total consideration of $267.7 million. The repurchases in the debt
tender offers for the senior notes resulted in a loss on the early extinguishment of debt of $104.9 million, ($64.9
million or $0.06 per share after tax), which was recognized in the second quarter of 2013.
Additionally, during the second quarter of 2013, the Company repurchased $208.8 million of the 2017
Notes in a privately negotiated transaction, along with $17.3 million of its 8.125% senior notes due 2018 and
$78.5 million of its 8.500% senior notes due 2020 in open market repurchases. These transactions resulted in a
loss on the early extinguishment of debt of $54.9 million ($34.0 million or $0.04 per share after tax), which
was recognized in the second quarter of 2013.
F-17
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements