Frontier Communications 2014 Annual Report Download - page 108

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At December 31, 2014, we have outstanding performance letters of credit as follows:
($ in thousands) Amount
CNA Financial Corporation (CNA) . . . $45,659
All other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,186
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46,845
CNA serves as our agent with respect to general liability claims (auto, workers compensation and
other insured perils of the Company). As our agent, they administer all claims and make payments for
claims on our behalf. We reimburse CNA for such services upon presentation of their invoice. To serve
as our agent and make payments on our behalf, CNA requires that we establish a letter of credit in
their favor. CNA could potentially draw against this letter of credit if we failed to reimburse CNA in
accordance with the terms of our agreement. The amount of the letter of credit is reviewed annually
and adjusted based on claims history.
None of the above letters of credit restrict our cash balances.
(19) Subsequent Events:
On February 5, 2015, we entered into an agreement with Verizon Communications Inc. (Verizon)
to acquire Verizon’s wireline operations that provide services to residential, commercial and wholesale
customers in California, Florida and Texas for a purchase price of $10.54 billion in cash (the Verizon
Transaction), with adjustments for working capital. Upon completion of the Verizon Transaction,
Frontier will operate Verizon properties which included 3.7 million voice connections, 2.2 million
broadband connections, and 1.2 million FiOSvideo connections. Subject to regulatory approval, the
transaction is expected to close in the first half of 2016.
Frontier has received a commitment for bridge financing from J.P. Morgan, Bank of America Merrill
Lynch and Citibank for 100 percent of the purchase price. The transaction is not subject to a financing
condition.
F-47
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements