FairPoint Communications 2005 Annual Report Download - page 75

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· $129.2 million to repurchase all of the Company’s series A preferred stock subject to mandatory redemption, or the series A preferred stock, from the
holders thereof (together with accrued and unpaid dividends thereon);
· $10.6 million to repay a substantial portion of the Company’s subsidiaries’ outstanding long-term debt (including accrued interest);
· $7.0 million to repay in full a promissory note issued by the Company in connection with a past acquisition;
· $18.4 million to invest in temporary investments pending the redemption of the 9 % notes and the floating rate notes not tendered in the tender offers
for such notes; and
· $44.4 million to pay fees and expenses, including underwriting discounts of $27.8 million, $8.2 million of debt issuance costs associated with the
credit facility and a transaction fee of approximately $8.4 million paid to Kelso & Company, one of the Company’s investors.
On March 10, 2005, the Company used $18.4 million which it had invested in temporary investments, together with $6.6 million of cash on hand, to
redeem the $0.2 million aggregate principal amount of the 9 % notes (including accrued interest and redemption premiums) that were not tendered in the
tender offer for such notes and the $24.2 million aggregate principal amount of the floating rate notes (including accrued interest) that were not tendered in the
tender offer for such notes.
On May 2, 2005, the Company used $22.4 million of borrowings under the delayed draw facility of the credit facility to redeem the $19.9 million
aggregate principal amount of the 12 % notes (including accrued interest and redemption premiums) that were not tendered in the tender offer for such notes.
In connection with such redemption, a premium of $1.2 million was recorded and an additional $0.4 million of existing debt issuance costs has been
subsequently charged off, resulting in the recognition of a loss of $1.6 million for retirement of debt in the second quarter of 2005.
The Company reported other expense in the amount of $87.7 million, comprised of a $77.8 million loss on early retirement of debt and a $9.9 million
loss on redemption of series A preferred stock. With respect to the $77.8 million loss on early retirement of debt, $16.8 million was recorded for the write-off
of existing debt issuance costs and the remaining $61.0 million was fees and penalties.
(b) Dividends
The Company has adopted a dividend policy under which a substantial portion of the cash generated by the Company’s business in excess of operating
needs, interest and principal payments on indebtedness, dividends on future senior classes of capital stock, if any, capital expenditures, taxes and future
reserves, if any, would in general be distributed as regular quarterly dividend payments to the holders of its common stock, rather than retained and used for
other purposes.
On December 14, 2005, the Company declared a dividend of $0.39781 per share of common stock, which was paid on January 18, 2006 to holders of
record as of December 30, 2005. In 2005, the Company has paid dividends totaling $35.3 million, or $1.41886 per share of common stock.
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