FairPoint Communications 2005 Annual Report Download - page 85

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(c) Fixed Rate and Floating Rate Senior Subordinated Notes Issued in 1998
FairPoint issued $125.0 million aggregate principal amount of senior subordinated notes (the 1998 Fixed-Rate Notes) and $75.0 million of floating-rate
notes (the 1998 Floating-Rate Notes) in 1998. The 1998 Fixed-Rate Notes bore interest at the rate of 9.5% per annum and the 1998 Floating Rate Notes bore
interest at a rate per annum equal to LIBOR plus 418.75 basis points, in each case payable semiannually in arrears. The LIBOR rate on the 1998 Floating-
Rate Notes was determined semiannually.
At December 31, 2004 the Company’s restricted covenants on its fixed-rate and floating-rate senior subordinated notes issued in 1998, its senior
subordinated notes issued in 2000, and its senior notes issued in 2003 did not allow the Company to make any dividend payments.
The 1998 Fixed Rate Notes and the 1998 Floating-Rate Notes were repaid in full in 2005 using proceeds from the Company’s initial public offering and
borrowings under the 2005 Senior Secured Notes.
(d) Senior Subordinated Notes Issued in 2000
FairPoint issued $200.0 million aggregate principal amount of senior subordinated notes (the 2000 Notes) in 2000. The 2000 Notes bore interest at the rate
of 12.5% per annum, payable semiannually in arrears.
The 2000 Notes were repaid in full in 2005 using proceeds from the Company’s initial public offering and borrowings under the 2005 Senior Secured
Notes.
(e) Senior Notes Issued in 2003
FairPoint issued $225.0 million aggregate principal amount of senior notes in 2003 (the 2003 Notes). The 2003 Notes bear interest at the rate of 11 7/8%
per annum, payable semiannually in arrears.
The 2003 Notes mature on March 1, 2010. FairPoint may redeem the 2003 Notes at any time on or after March 1, 2007 at the redemption prices stated in
the indenture under which the 2003 Notes were issued, together with accrued and unpaid interest, if any, to the redemption date. In the event of a change of
control, FairPoint must offer to repurchase the outstanding 2003 Notes for cash at a purchase price of 101% of the principal amount of such notes, together
with all accrued and unpaid interest, if any, to the date of repurchase.
The 2003 Notes are general unsecured obligations of FairPoint, ranking pari passu in right of payment with all existing and future senior debt of
FairPoint, including all obligations under the Company’s amended and restated credit facility, and senior in right of payment to all existing and future
subordinated indebtedness of FairPoint.
The indenture governing the 2003 Notes contains certain customary covenants and events of default.
As a result of the issuance of the 2003 Notes, the Company recorded $2.8 million and $0.7 million of nonoperating gains on the extinguishment of the
1998 Fixed Rate Notes and 2000 Notes and the Carrier Services debt, respectively. The Company also repurchased some Series A preferred stock at a
discount of $2.9 million. Additionally, the Company recorded a nonoperating loss of $5.0 million for the write-off of debt issue costs related to this
extinguishment of debt in 2003.
Of the 2003 Notes, $223.0 million were repaid in 2005 using proceeds from the Company’s initial public offering and borrowings under the 2005 Senior
Secured Notes.
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