FairPoint Communications 2005 Annual Report Download - page 74

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December 31, 2005 and was adopted by the Company in the fourth quarter of 2005. The Company accounts for its wireline operations under SFAS No. 71,
“Accounting for the Effects of Certain Types of Regulation”. Therefore, in accordance with federal and state regulations, the Company is following the FCC’s
Part 32 accounting. As a result of the Company’s accounting under SFAS No. 71, the adoption of FIN 47 had no impact on the Company. The Company
evaluated the impact of FIN 47 on its non-regulated assets and determined that the impact was immaterial.
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(a) General
On February 8, 2005, the Company consummated an initial public offering, or the offering, of 25,000,000 shares of its common stock, par value $0.01
per share, or common stock, at a price to the public of $18.50 per share.
In connection with the offering, the Company entered into a new senior secured credit facility, or the credit facility, with a syndicate of financial
institutions, including Deutsche Bank Trust Company Americas, as administrative agent. The credit facility is comprised of a revolving facility in an
aggregate principal amount of $100 million (less amounts reserved for letters of credit) and a term facility in an aggregate principal amount of $588.5 million
(including a $22.5 million delayed draw facility). The revolving facility has a six year maturity and the term facility has a seven year maturity. The offering,
the credit facility and the transactions described below are referred to herein collectively as the transactions.
The Company received gross proceeds of $462.5 million from the offering which, net of costs incurred of $30.6 million related to the offering, was
allocated to paid-in capital. The Company used the gross proceeds of $462.5 million from the offering together with borrowings of $566.0 million under the
term facility of the credit facility as follows:
· $176.7 million to repay in full all outstanding loans under the Company’s old credit facility (including accrued interest);
· $122.1 million to repurchase $115.0 million aggregate principal amount of the Company’s 9 % senior subordinated notes due 2008, or the 9 %
notes, pursuant to the tender offer and consent solicitation for such notes (including accrued interest, tender premiums and consent payments);
· $51.8 million to repurchase $50.8 million aggregate principal amount of the Company’s floating rate callable securities due 2008, or the floating rate
notes, pursuant to the tender offer and consent solicitation for such notes (including accrued interest, tender premiums and consent payments);
· $193.4 million to repurchase $173.1 million aggregate principal amount of the Company’s 12 % senior subordinated notes due 2010, or the 12 %
notes, pursuant to the tender offer and consent solicitation for such notes (including accrued interest, tender premiums and consent payments);
· $274.9 million to repurchase $223.0 million aggregate principal amount of the Company’s 11 % senior notes due 2010, or the 11 % notes,
pursuant to the tender offer and consent solicitation for such notes (including accrued interest, tender premiums and consent payments);
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