Frontier Communications 2014 Annual Report Download - page 21

costs, loss of revenues or other effects associated with uncertainty about the transaction. In addition,
until the Verizon Transaction is completed, the attention of Frontier management may be unnecessarily
diverted from ongoing business and regular business responsibilities.
Further, governmental agencies may decline to grant required approvals, or they may impose
conditions on their approval of the Verizon Transaction that could have an adverse effect on the
Company’s business, financial condition and results of operations. If certain governmental agencies
decline to grant any required approval for the Verizon Transaction, the Verizon Transaction may not be
consummated. In addition, conditions imposed by governmental agencies in connection with their
approval of the Verizon Transaction (such as service quality or capital expenditure requirements) may
restrict the Company’s ability to achieve anticipated synergies, revenues and cash flows.
The securities purchase agreement contains provisions that may discourage other
companies from trying to acquire Frontier.
The securities purchase agreement for the Verizon Transaction contains provisions that may
discourage a third party from submitting a business combination proposal to us prior to the closing of
the Verizon Transaction that might result in greater value to our stockholders than the Verizon
Transaction. The securities purchase agreement provides that we may not sell all or substantially all of
our assets unless the buyer assumes in writing our obligations, including the payment of the purchase
price, under the securities purchase agreement. This would represent an additional cost for a potential
third party seeking a business combination with us.
Our stock price may be adversely affected if we are unable to consummate the Verizon
Transaction.
If the Verizon Transaction is not completed for any reason, the trading price of Frontier’s common
stock may decline to the extent that the market price of the common stock reflects positive market
assumptions that the Verizon Transaction will be completed and the related benefits will be realized.
Frontier may also be subject to additional risks if the Verizon Transaction is not completed, including:
•significant costs related to the transaction, such as legal, accounting, filing, financial advisory,
and integration costs that have already been incurred or will continue up to closing. The
Company currently expects that it will incur approximately $450 million of operating expenses
and capital expenditures in total related to acquisition and integration activities in 2015 and 2016
associated with the Verizon Transaction;
•significant interest expense and dividend costs will be incurred if Frontier completes the
financing of debt and equity securities prior to closing;
•the market price of Frontier common stock could decline as a result of sales of Frontier common
stock in the market due to the issuance of additional equity securities in connection with the
financing of the Verizon Transaction or the perception that these sales could occur; and
•potential disruption to the business of Frontier and distraction of its workforce and management
team.
The pendency of the Verizon Transaction could adversely affect the business and
operations of Frontier and the acquired business.
In connection with the pending Verizon Transaction, some customers of the acquired business
may delay or defer decisions or may end their relationships with Verizon prior to completion of the
Verizon Transaction or with the Company after the Verizon Transaction closes.
Risks Related to Our Business
We will likely face further reductions in voice customers, switched access minutes of use,
long distance revenues and subsidy revenues.
We have experienced declining voice customers, switched access minutes of use, long distance
revenues, federal and state subsidies and related revenues because of economic conditions,
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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES