FairPoint Communications 2010 Annual Report Download - page 100

Table of Contents
DIP Credit Agreement provided for DIP Financing. Pursuant to the Order of the Bankruptcy Court, dated October 28, 2009 (the “Interim Order”), the DIP
Borrowers were authorized to enter into and immediately draw upon the DIP Credit Agreement on an interim basis, pending a final hearing before the
Bankruptcy Court, in an aggregate amount of $20.0 million. On March 11, 2010 the Bankruptcy Court entered the final order of the Bankruptcy Court (the
“Final DIP Order”), permitting the DIP Borrowers access to the total $75.0 million of the DIP Financing, subject to the terms and conditions of the DIP Credit
Agreement and related orders of the Bankruptcy Court. As of December 31, 2010, the Company had not borrowed any amounts under the DIP Credit
Agreement and letters of credit totaling $18.7 million had been issued under the DIP Credit Agreement.
The DIP Financing (defined as the revolving facility with an aggregate principal amount of up to $75.0 million, of which up to $30.0 million was also
available in the form of one or more letters of credit that may be issued to third parties for our account) matured and was repayable in full on the earlier to
occur of (i) January 31, 2011, which date could have been extended for up to an additional two months with the consent of the Required Lenders (as defined in
the DIP Credit Agreement) for no additional fee, (ii) the Effective Date, (iii) the voluntary reduction by the DIP Borrowers to zero of all commitments to lend
under the DIP Credit Agreement, or (iv) the date on which the obligations under the DIP Financing were accelerated by the non-defaulting DIP Lenders holding a
majority of the aggregate principal amount of the outstanding loans and letters of credit plus unutilized commitments under the DIP Financing upon the
occurrence and during the continuance of certain events of default.
Other material provisions of the DIP Credit Agreement included the following:
Interest Rate and Fees. Interest rates for borrowings under the DIP Credit Agreement were, at the DIP Borrowers’ option, at either (i) the Eurodollar rate
plus a margin of 4.5% or (ii) the base rate plus a margin of 3.5%, payable monthly in arrears on the last business day of each month.
Interest accrued from and including the date of any borrowing up to but excluding the date of any repayment thereof and was payable (i) in respect of each
base rate loan, monthly in arrears on the last business day of each month, (ii) in respect of each Eurodollar loan, on the last day of each interest period
applicable thereto (which shall be a period of one month) and (iii) in respect of each such loan, on any prepayment or conversion (on the amount prepaid or
converted), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. The DIP Credit Agreement provided for the payment to the
Administrative Agent, for the pro rata benefit of the DIP Lenders, of an upfront fee in the aggregate principal amount of $1.5 million, which upfront fee was
payable in two installments: (1) the first installment of $0.4 million was due and payable on October 28, 2009, the date on which the Interim Order was
entered by the Bankruptcy Court, and (2) the remainder of the upfront fee was due and payable on the date the Final DIP Order was entered by the
Bankruptcy Court. The DIP Credit Agreement also provided for an unused line fee of 0.50% on the unused revolving commitment, payable monthly in arrears
on the last business day of each month (or on the date of maturity, whether by acceleration or otherwise), and a letter of credit facing fee of 0.25% per annum
calculated daily on the stated amount of all outstanding letters of credit, payable monthly in arrears on the last business day of each month (or on the date of
maturity, whether by acceleration or otherwise), as well as certain other fees.
Voluntary Prepayments. Voluntary prepayments of borrowings and optional reductions of the unutilized portion of the commitments were permitted
without premium or penalty (subject to payment of breakage costs in the event Eurodollar loans are prepaid prior to the end of an applicable interest period).
Covenants. Under the DIP Credit Agreement, the DIP Borrowers were required to maintain compliance with certain covenants, including maintaining
minimum EBITDAR (earnings before interest, taxes, depreciation, amortization, restructuring charges and certain other non-cash costs and charges, as set
forth in the DIP Credit Agreement) and not exceeding maximum permitted capital expenditure amounts. Covenants related to EBITDAR and capital
expenditures were removed under the 15 th Amendment to the DIP Credit Agreement, effective October 22, 2010. The DIP Credit Agreement also contained
customary affirmative and negative covenants and restrictions, including, among others, with respect to investments, additional indebtedness, liens, changes
in the nature of the business, mergers, acquisitions, asset sales and transactions with affiliates. As of December 31, 2010, the DIP Borrowers were in
compliance with all covenants under the DIP Credit Agreement.
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