FairPoint Communications 2007 Annual Report Download - page 32

Table of Contents
could reduce our sales or increase our costs and, accordingly, could have a material adverse effect on our business, financial condition
and results of operations.
Both of the labor unions representing Spinco employees objected to the merger in certain regulatory proceedings. The International
Brotherhood of Electrical Workers, referred to as the IBEW, filed four grievances alleging that the transaction violates their collective
bargaining agreements with respect to job security, benefit plans, transfer of work and hiring restrictions. The IBEW’s grievances were
submitted to arbitration under the labor arbitration rules of the American Arbitration Association pursuant to the parties’ collective
bargaining agreements. On November 30, 2007, the arbitrator hearing the grievances filed by the IBEW concerning benefit plans and
hiring restrictions issued a decision finding no merit to those grievances and denied them. On December 10, 2007, the arbitrator hearing
the grievances filed by the IBEW concerning benefit plans and hiring restrictions issued a decision finding no merit to those grievances
and denied them. The decision in each arbitration has become final. The Communications Workers of America filed four grievances
which are identical to those of the IBEW. Those grievances have been denied by Verizon, and the Communications Workers of America
has not sought to have them arbitrated.

Prior to entering into the merger agreement, we grew rapidly by acquiring other businesses. Subject to restrictions in the tax sharing
agreement that limit our ability to take certain actions during the two years following the spin-off that could jeopardize the tax-free status of
the spin-off or merger and restrictions imposed by the orders of state regulatory authorities in connection with the approval of the
transactions, we expect that a portion of our future growth may result from additional acquisitions. Growth through acquisitions,
including the merger, entails numerous risks, including:
• strain on our financial, management and operational resources, including the distraction of our management team in identifying
potential acquisition targets, conducting due diligence and negotiating acquisition agreements;
• difficulties in integrating the network, operations, personnel, products, technologies and financial, computer, payroll and other
systems of acquired businesses;
• difficulties in enhancing our customer support resources to adequately service our existing customers and the customers of
acquired businesses;
• the potential loss of key employees or customers of the acquired businesses;
• unanticipated liabilities or contingencies of acquired businesses;
• unbudgeted costs which we may incur in connection with pursuing potential acquisitions which are not consummated;
• failure to achieve projected cost savings or cash flow from acquired businesses;
• fluctuations in our operating results caused by incurring considerable expenses to acquire businesses before receiving the
anticipated revenues expected to result from the acquisitions;
• difficulties in finding suitable acquisition candidates;
• difficulties in making acquisitions on attractive terms due to a potential increase in competitors; and
• difficulties in obtaining and maintaining any required regulatory authorizations in connection with acquisitions.
The size of the Spinco business in relation to our existing business may exacerbate the above risks with respect to the merger.
In the future, we may need additional capital to continue growing through acquisitions. This additional capital may be raised in the
form of additional debt, which would increase our leverage and could have an adverse effect on our ability to pay dividends. We may not
be able to raise sufficient capital on terms we consider acceptable, or at all.
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