FairPoint Communications 2010 Annual Report Download - page 64

Table of Contents
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.
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.
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 limited, 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 restricted our ability to pay dividends on or repurchase our common stock under certain circumstances.
Following the filing of the Chapter 11 Cases, we made no payments on our pre-petition debt. 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 Pre-Petition Notes. The failure to make the interest
payment on the Pre-Petition Notes constituted an event of default under the Pre-Petition Notes upon the expiration of a thirty day grace period. An event of
default under the Pre-Petition Notes permitted the holders of the Pre-Petition Notes to accelerate the maturity of the Pre-Petition Notes. In addition, the filing of
the Chapter 11 Cases constituted an event of default under the New Notes.
In addition, as a result of the 2009 Restatement, we determined that we were not in compliance with the interest coverage ratio maintenance covenant and the
leverage ratio maintenance covenant under our 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 Pre-Petition Notes, in each case at
June 30, 2009.
On the Effective Date, all outstanding obligations under the Pre-Petition Notes and the indentures governing the Pre-Petition Notes were terminated.
Other Pre-Petition Agreements
As a condition to the approval of the Merger and related transactions by state regulatory authorities we agreed to make certain capital expenditures following
the completion of the Merger. The Merger Orders have been modified by Regulatory Settlements agreed to with representatives for each of Maine, New
Hampshire and Vermont, and approved by the applicable regulatory authorities in Maine, New Hampshire and Vermont, and approved by the Bankruptcy
Court as part of the Plan. For a description of these capital expenditure requirements, see “Item 1. — Business — Regulatory Environment — State Regulation
— Regulatory Conditions to the Merger, as Modified in Connection with the Plan.”
We are required to make certain capital expenditures pursuant to the Regulatory Settlements. For more information regarding the Regulatory Settlements, see
“Item 1. Business — State Regulation - Regulatory Conditions to the Merger, as Modified in Connection with the Plan.”
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