FairPoint Communications 2004 Annual Report Download - page 62

•the terms of our credit facility; and
•the covenants of any future outstanding indebtedness the Company or its subsidiaries incur.
The Company's operating subsidiaries have no obligation, contingent or otherwise, to make funds available to the Company, whether
in the form of loans, dividends or other distributions. In addition, we have a number of minority investments and passive partnership
interests from which we receive distributions. For example, in 2004 and 2003, we received $15.0 million and $10.8 million, respectively, of
distributions from such investments and interests, which represented a material portion of our cash flow. The $15.0 million received in the
year ended December 31, 2004 includes a non-recurring $2.5 million distribution. We do not control the timing or amount of distributions
from such investments or interests and we may not have access to the cash flows of these entities.
Accordingly, our ability to pay dividends with respect to shares of our common stock and to repay our credit facility at maturity or
otherwise may be dependent upon factors beyond our control. Subject to limitations in our credit facility, the Company's subsidiaries may
also enter into agreements that contain covenants prohibiting them from distributing or advancing funds or transferring assets to the
Company under certain circumstances, including to pay dividends.


Covenants in our credit facility impose significant operating and financial restrictions on us. These restrictions prohibit or limit, among
other things:
•the incurrence of additional indebtedness and the issuance by our subsidiaries of preferred stock;
•the payment of dividends on, and purchases or redemptions of, capital stock;
•a number of other restricted payments, including investments;
•the creation of liens;
•the ability of our subsidiaries to guarantee our and their indebtedness;
•specified sales of assets;
•the creation of encumbrances or restrictions on the ability of our subsidiaries to distribute and advance funds or transfer assets
to us or any other subsidiary;
•specified transactions with affiliates;
•sale and leaseback transactions;
•our ability to enter lines of business outside the communications business; and
•certain consolidations and mergers and sales and/or transfers of assets by or involving us.
Our credit facility also contains covenants which require us to maintain specified financial ratios and satisfy financial condition tests,
including, without limitation, a maximum total leverage ratio and a minimum interest coverage ratio.

 
Our ability to comply with the covenants, ratios or tests contained in our credit facility or in the agreements governing our future
indebtedness may be affected by events beyond our control, including prevailing economic, financial and industry conditions. A breach of any
of these covenants, ratios or tests could result in a default under our credit facility. Certain events of default under our credit
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