FairPoint Communications 2009 Annual Report Download - page 134

Table of Contents
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Voluntary prepayments of borrowings under the Term Loan facilities and optional reductions of the unutilized portion of the revolving facility
commitments will be permitted upon payment of an applicable payment fee, which shall only be applicable to certain prepayments of borrowings as
described in the Pre-petition Credit Facility.
Under the Pre-petition Credit Facility, the Company is required to meet certain financial tests, including a minimum cash interest coverage ratio and
a maximum total leverage ratio. The Pre-petition Credit Facility contains customary affirmative covenants. The Pre-petition Credit Facility also contains
negative covenants and restrictions, including, among others, with respect to redeeming and repurchasing the Company's other indebtedness, loans and
investments, additional indebtedness, liens, capital expenditures, changes in the nature of the Company's business, mergers, acquisitions, asset sales and
transactions with affiliates. The Pre-petition Credit Facility contains customary events of default, including, but not limited to, failure to pay principal,
interest or other amounts when due (subject to customary grace periods), breach of covenants or representations, cross-defaults to certain other
indebtedness in excess of specified amounts, judgment defaults in excess of specified amounts, certain ERISA defaults, the failure of any guaranty or
security document supporting the Pre-petition Credit Facility and certain events of bankruptcy and insolvency.
Scheduled amortization payments on our Pre-petition Credit Facility began in 2009. No principal payments are due on the Notes prior to their
maturity. As a result of the Chapter 11 Cases, the Company does not expect to make any additional principal or interest payments on its pre-petition
debt.
For the year ended December 31, 2009, the Company repaid $8.4 million of principal under the Term Loan A Facility and $6.1 million of principal
under the Term Loan B Facility.
Prior to the filing of the Chapter 11 Cases, the Company failed to make principal and interest payments due under the Pre-petition Credit Facility
on September 30, 2009. The failure to make the principal payment on the due date and failure to make the interest payment within five days of the due
date constituted events of default under the Pre-petition Credit Facility. An event of default under the Pre-petition Credit Facility permits the lenders
under the Pre-petition Credit Facility to accelerate the maturity of the loans outstanding thereunder, seek foreclosure upon any collateral securing such
loans and terminate any remaining commitments to lend to the Company. The occurrence of an event of default under the Pre-petition Credit Facility
constituted an event of default under the Swaps. In addition, the Company failed to make payments due under the Swaps on September 30, 2009, which
failure resulted in an event of default under the Swaps upon the expiration of a three business day grace period.
In addition, as a result of the Restatement, the Company determined that the Company was not in compliance with the interest coverage ratio
maintenance covenant and the leverage ratio maintenance covenant under the Pre-petition Credit Facility for the measurement period ended June 30,
2009, which constituted an event of default under each of the Pre-petition Credit Facility and the Swaps, and may have constituted an event of default
under the Notes, in each case at June 30, 2009.
The Pre-petition Credit Facility also contains restrictions on the Company's ability to pay dividends on its common stock.
The Pre-petition Credit Facility is guaranteed, jointly and severally, by all existing and subsequently acquired or organized wholly owned first-tier
domestic subsidiaries of the Company that are holding
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