FairPoint Communications 2010 Annual Report Download - page 96

Table of Contents
Pursuant to the Plan, the Company did not make any principal or interest payments on its pre-petition debt during the pendency of the Chapter 11 Cases.
In accordance with the Reorganizations Topic of the ASC, as interest on the Pre-Petition Notes subsequent to the Petition Date was not expected to be an allowed
claim, the Company had not accrued interest expense on the Pre-Petition Notes subsequent to the Petition Date. Accordingly, $72.2 million and $13.4 million
of interest on unsecured debts, at the stated contractual rates, was not accrued for this reason during the year ended December 31, 2010 and 2009, respectively.
The Company had continued to accrue interest expense on the Pre-Petition Credit Facility, as such interest is considered an allowed claim per the Plan.
All pre-petition debt was terminated on the Effective Date.
Prior to March 31, 2008, debt held by the Verizon Northern New England business was recorded at the Verizon consolidated level and interest expense was
allocated to the Verizon Northern New England business.
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On March 31, 2008, immediately prior to the Merger, FairPoint and Spinco entered into the Pre-Petition Credit Facility consisting of the Revolving Credit
Facility, the Term Loan and the Delayed Draw Term Loan. Spinco drew $1,160.0 million under the Term Loan immediately prior to the spin-off, and then the
Company drew $470.0 million under the Term Loan and $5.5 million under the Delayed Draw Term Loan concurrently with the closing of the Merger.
Subsequent to the Merger, the Company had drawn an additional $194.5 million under the Delayed Draw Term Loan. These funds were used for certain
capital expenditures and other expenses associated with the Merger.
On October 5, 2008 the administrative agent under the Pre-Petition Credit Facility filed for bankruptcy. The administrative agent accounted for thirty
percent of the loan commitments under the Revolving Credit Facility. On January 21, 2009, the Company entered into the Pre-Petition Credit Facility
Amendment under which, among other things, the administrative agent resigned and was replaced by a new administrative agent. In addition, the resigning
administrative agent’s undrawn loan commitments under the Revolving Credit Facility, totaling $30.0 million, were terminated and are no longer available to
the Company.
The Revolving Credit Facility has a swingline subfacility in the amount of $10.0 million and a letter of credit subfacility in the amount of $30.0 million,
which will allow issuances of standby letters of credit by the Company. The Pre-Petition Credit Facility also permitted interest rate and currency exchange
swaps and similar arrangements that the Company may enter into with the lenders under the Pre-Petition Credit Facility and/or their affiliates.
As of December 31, 2010, the Company had borrowed $155.5 million under the Revolving Credit Facility. Upon the event of default under the Pre-Petition
Credit Facility relating to the Chapter 11 Cases described herein, the commitments under the Revolving Credit Facility were automatically terminated.
Accordingly, as of December 31, 2010, no funds remained available under the Revolving Credit Facility.
The Term Loan B Facility and the Delayed Draw Term Loan will mature in March 2015 and the Revolving Credit Facility and the Term Loan A Facility
will mature in March 2014. Each of the Term Loan A Facility, the Term Loan B Facility and the Delayed Draw Term Loan, collectively referred to as the Term
Loans, are repayable in quarterly installments in the manner set forth in the Pre-Petition Credit Facility beginning June 30, 2009.
Borrowings under our Pre-Petition Credit Facility bear interest at variable interest rates. Interest rates for borrowings under the Pre-Petition Credit Facility
are, at the Company’s option, for the Revolving Credit Facility and for the Term Loans at either (a) the Eurodollar rate, as defined in the Pre-Petition Credit
Facility, plus an applicable margin or (b) the base rate, as defined in the Pre-Petition Credit Facility, plus an applicable margin.
The Company’s Term Loan B debt is subject to a LIBOR floor of 3.00%. As a result, the Company incurs interest expense at above-market levels when
LIBOR rates are below 3.00%.
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