FairPoint Communications 2009 Annual Report Download - page 136

Table of Contents
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Issuance of New Notes and Payment of Consent Fee
On July 29, 2009, the Company successfully consummated the Exchange Offer. On the Settlement Date, the Proposed Amendments became
operative and $439.6 million in aggregate principal amount of the Old Notes (which amount was equal to approximately 83% of the then outstanding
Old Notes) were exchanged for $439.6 million in aggregate principal amount of the New Notes. In addition, pursuant to the terms of the Exchange
Offer, an additional $18.9 million in aggregate principal amount of New Notes was issued to holders who tendered their Old Notes in the Exchange
Offer as payment for accrued and unpaid interest on the exchanged Old Notes up to, but not including, the Settlement Date.
The New Notes mature on April 2, 2018 and bear interest at a fixed rate of 131/8%, payable in cash, except that the New Notes bore interest at a
rate of 15% for the period from July 29, 2009 through and including September 30, 2009. In addition, the Company was permitted to pay the interest
payable on the New Notes for the Initial Interest Payment Period in the form of cash, by capitalizing such interest and adding it to the principal amount
of the New Notes or a combination of both cash and such capitalization of interest, at its option. The Company intended to make the interest payments
due on October 1, 2009 on the New Notes by capitalizing such interest and adding it to the principal amount of the New Notes. As such, interest
payable of $12.2 million at September 30, 2009 was reflected as interest payable in kind on the condensed consolidated balance sheet. As the Notes
have been classified as subject to compromise as of December 31, 2009, the Company has classified the accrued interest on the exchanged Old Notes as
of December 31, 2009 of $12.2 million as subject to compromise on the condensed consolidated balance sheet. In accordance with the Reorganizations
Topic of the ASC, as interest on the Notes subsequent to the Petition Date is not expected to be an allowed claim, the Company has not accrued interest
expense on the Notes subsequent to the Petition Date.
The New Indenture limits, among other things, the Company's ability to incur additional indebtedness, issue certain preferred stock, repurchase its
capital stock or subordinated debt, make certain investments, create certain liens, sell certain assets or merge or consolidate with or into other companies,
incur restrictions on the ability of the Company's subsidiaries to make distributions or transfer assets to the Company and enter into transactions with
affiliates.
The New Indenture also restricts the Company's ability to pay dividends on or repurchase its common stock under certain circumstances.
During the year ended December 31, 2009, the Company repurchased $19.9 million in aggregate principal amount of the Old Notes for an
aggregate purchase price of $6.3 million in cash. In total, including amounts repaid under the Term Loan A Facility and Term Loan B Facility, the
Company retired $34.5 million of outstanding debt during the year ended December 31, 2009.
In connection with the Exchange Offer and the corresponding consent solicitation, the Company also paid a cash consent fee of $1.6 million in the
aggregate to holders of Old Notes who validly delivered and did not revoke consents in the consent solicitation prior to a specified early consent
deadline, which amount was equal to $3.75 in cash per $1,000 aggregate principal amount of Old Notes exchanged in the Exchange Offer.
Prior to the filing of the Chapter 11 Cases, the Company failed to make the October 1, 2009 interest payment on the Notes. The failure to make the
interest payment on the Notes constituted an
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