FairPoint Communications 2007 Annual Report Download - page 66

Table of Contents
aggregate principal amount of up to $500.0 million, a senior secured seven-year term loan B facility in an aggregate principal amount of
up to $1.18 billion and a delayed draw term loan facility available to be drawn until the first anniversary of the closing date of the merger
in an aggregate principal amount of up to $200.0 million.
Our ability to service our indebtedness following the transactions will depend on our ability to generate cash in the future. Scheduled
amortization payments are expected to begin on the term loan A facility of the new credit facility in 2009, on the term loan B facility of the
new credit facility in 2010 and on the delayed draw facility of the new credit facility in 2011. We will be required to refinance all or a
portion of our indebtedness on or before the maturity date and may not be able to refinance our indebtedness on commercially reasonable
terms or at all. If we are unable to renew or refinance the new credit facility, our failure to repay all amounts due on the respective maturity
dates would cause a default under the new credit facility.
On January 17, 2008, we entered into a letter agreement with Capgemini, which agreement was amended on February 28, 2008, in
connection with the transactions. This agreement, as amended, provides that, if, following the nine month anniversary of the
consummation of the merger, we continue to receive or request certain services under the TSA, Capgemini will pay an amount not to
exceed $49.5 million of such fees for the tenth through twelfth months following the consummation of the merger, if applicable. In
exchange for the payment of any fees under the TSA, we expect to issue to Capgemini shares of FairPoint preferred stock having a
liquidation preference equal to the aggregate amount of such fees paid by Capgemini. The preferred stock will have a stated liquidation
value of $1,000 per share, a 6.75% cumulative annual dividend in year one and an 8.75% cumulative annual dividend in year two and
each succeeding year, which dividend will be payable in additional shares of preferred stock. The preferred stock issued to Capgemini
will be non-voting, will not be convertible and will have no other rights or preferences. The preferred stock will be redeemable, in whole or
in part, only after the expiration of the TSA, after payment to the supplier of the deferred payment obligations under the TSA and after we
meet certain financial tests.
We believe that following the transactions that cash generated from operations will be sufficient to meet our debt service, dividend,
capital expenditure and working capital requirements and employee benefit plan obligations for the foreseeable future, and to complete the
back office and systems integration after the merger. We believe that following the transactions we may consider additional capital
expenditures if cash is available beyond these requirements and we believe they are beneficial. Subject to restrictions in the agreements
governing our indebtedness, we may incur more indebtedness for working capital, capital expenditures, dividends, acquisitions and for
other purposes. In addition, we may require additional financing or may be required to reduce our dividend payments if our results of
operations or plans materially change in an adverse manner or prove to be materially inaccurate. Additional financing, even if permitted
under the terms of the agreements governing the our indebtedness following the transactions, may not be available on terms acceptable to
us or at all.
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We do not have any off-balance sheet arrangements.
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The tables set forth below contain information with regard to disclosures about contractual obligations and commercial
commitments.
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