FairPoint Communications 2010 Annual Report Download - page 37
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Table of Contents
An inability to generate sufficient funds from operations to repay or refinance our indebtedness at maturity or otherwise fund our operations could have a
material adverse impact on our business, financial condition, results of operations, liquidity and/or the market price of our Common Stock.
The Exit Credit Agreement contains restrictions, covenants and events of default that, among other things, require us to satisfy certain financial tests and
maintain certain financial ratios and restrict our ability to incur additional indebtedness and to refinance our existing indebtedness. The terms of the Exit
Credit Agreement impose, and the agreements governing any future indebtedness may impose, various restrictions and covenants on us that could limit our
ability to respond to market conditions, provide for capital investment needs or take advantage of business opportunities by limiting the amount of additional
borrowings we may incur. These restrictions may include compliance with, or maintenance of, certain financial tests and ratios and may limit or prohibit our
ability to, among other things:
incur additional debt and issue preferred stock;
pay dividends in the future or make other distributions on our stock or repurchase or redeem stock;
create liens;
redeem or prepay certain debt;
make certain investments;
engage in specified sales of assets;
enter into transactions with affiliates;
enter new lines of business;
engage in consolidation, mergers and acquisitions; and
make certain capital expenditures.
These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of
financing, merger and acquisition and other corporate opportunities.
Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and maintain these financial tests and
ratios. Failure to comply with any of the covenants in the Exit Credit Agreement could result in a default thereunder. In addition, the limitations imposed by
any financing arrangements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.
Any of these events could have a material adverse impact on our business, financial condition, results of operations, liquidity and/or the market price of our
Common Stock.
As of the Effective Date, our NOLs have been substantially reduced by the recognition of gains on the discharge of certain debt pursuant to the Plan. In
addition, our emergence from bankruptcy resulted in an ownership change for federal income tax purposes
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