FairPoint Communications 2009 Annual Report Download - page 78

Table of Contents
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.
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Spinco issued, and we assumed in the Merger, $551.0 million aggregate principal amount of the Old Notes. The Old Notes mature on April 1,
2018 and are not redeemable at our option prior to April 1, 2013. Interest is payable on the Old Notes semi-annually, in cash, on April 1 and October 1.
The Old Notes bear interest at a fixed rate of 131/8% and principal is due at maturity. The Old Notes were issued at a discount and, accordingly, at the
date of their distribution, the Old Notes had a carrying value of $539.8 million (principal amount at maturity of $551.0 million less discount of
$11.2 million). $9.9 million of discount on the Notes was written off following the filing of the Chapter 11 Cases in order to adjust the carrying amount
of our pre-petition debt to the Bankruptcy Court approved amount of the allowed claims for our pre-petition debt.
Upon the consummation of the Exchange Offer and the corresponding consent solicitation, substantially all of the restrictive covenants in the
indenture governing the Old Notes were deleted or eliminated and certain of the events of default and various other provisions contained therein were
modified.
Pursuant to the Exchange Offer, on July 29, 2009, we exchanged $439.6 million in aggregate principal amount of the Old Notes (which amount
was equal to approximately 83% of the then outstanding Old Notes) for $458.5 million in aggregate principal amount of the New Notes (which amount
includes New Notes issued to tendering noteholders 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, we were 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 our option.
In connection with the Exchange Offer and the corresponding consent solicitation, we 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.
The New Indenture limits, among other things, our ability to incur additional indebtedness, issue certain preferred stock, repurchase our 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 our subsidiaries to make distributions or transfer assets to us and enter into transactions with affiliates.
The New Indenture also restricts our ability to pay dividends on or repurchase our common stock under certain circumstances.
During the year ended December 31, 2009, we 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, we retired
$34.5 million of outstanding debt during the year ended December 31, 2009.
Prior to the filing of the Chapter 11 Cases, we failed to make the October 1, 2009 interest payment on the Notes. The failure to make the interest
payment on the Notes constituted an event of default under the Notes upon the expiration of a thirty day grace period. An event of default under the
Notes permits the holders of the Notes to accelerate the maturity of the Notes. In addition, the filing of the Chapter 11 Cases constituted an event of
default under the New Notes. See "Part 1—Item 1. Business—Chapter 11 Cases—Defaults Under Outstanding Debt Instruments."
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