FairPoint Communications 2009 Annual Report Download - page 103

Table of Contents
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The Reorganizations Topic of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (the "ASC"), which is
applicable to companies in Chapter 11, generally does not change the manner in which financial statements are prepared. However, it does require that
the financial statements for periods subsequent to the filing of the Chapter 11 Cases distinguish transactions and events that are directly associated with
the reorganization from the ongoing operations of the business. Amounts that can be directly associated with the reorganization and restructuring of the
business must be reported separately as reorganization items in the statements of operations beginning in the quarter ending December 31, 2009. The
balance sheet must distinguish pre-petition liabilities subject to compromise from both those pre-petition liabilities that are not subject to compromise
and from post-petition liabilities. Liabilities that may be affected by a plan of reorganization must be reported at the amounts expected to be allowed,
even if they may be settled for lesser amounts. In addition, cash provided by and used for reorganization items must be disclosed. The Company has
applied the Reorganizations Topic of the ASC effective as of the Petition Date, and has segregated those items as outlined above for all reporting
periods subsequent to such date.
(c) Liquidity
The Company's short term and long term liquidity needs arise primarily from: (i) interest and principal payments on indebtedness; (ii) capital
expenditures and (iii) working capital requirements as may be needed to support and grow the Company's business. The Company expects that after the
Effective Date, its short term and long term liquidity needs will continue to arise primarily from: (i) interest and principal payments on indebtedness;
(ii) capital expenditures; and (iii) working capital requirements as may be needed to support and grow the Company's business. The Company expects
that its primary sources of liquidity after the Effective Date will be cash flow from operations, cash on hand and funds available under the Exit Facility
Loans.
On March 4, 2009, the Board of Directors suspended the payment of dividends on the Company's common stock.
The Company's $2,030 million Pre-petition Credit Facility consists of a non-amortizing revolving facility in an aggregate principal amount of
$200 million, the Term Loan A Facility, the Term Loan B Facility and the Delayed Draw Term Loan. Spinco drew $1,160 million under the Term Loan
immediately prior to being spun off by Verizon, and then FairPoint drew $470 million under the Term Loan and $5.5 million under the Delayed Draw
Term Loan concurrently with the closing of the Merger. Subsequent to the Merger, the Company borrowed the remaining $194.5 million available
under the Delayed Draw Term Loan. These funds were used for certain capital expenditures and other expenses associated with the Merger.
On October 5, 2008 the administrative agent under the Pre-petition Credit Facility filed for bankruptcy. The administrative agent accounted for
thirty percent of the loan commitments under the Revolving Credit Facility. On January 21, 2009 the Company entered into the Pre-petition Credit
Facility Amendment under which, among other things, the administrative agent resigned and was replaced by a new administrative agent. In addition,
the resigning administrative agent's undrawn loan commitments under the Revolving Credit Facility, totaling $30.0 million, were terminated and are no
longer available to the Company. On January 27, 2009, the Company borrowed an additional
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