FairPoint Communications 2010 Annual Report Download - page 97

Table of Contents
The Pre-Petition Credit Facility provided for payment to the lenders of a commitment fee on the average daily unused portion of the Revolving Credit
Facility commitments, payable quarterly in arrears on the last business day of each calendar quarter and on the date upon which the commitment is
terminated. The Pre-Petition Credit Facility also provided for payment to the lenders of a commitment fee from the closing date of the Pre-Petition Credit Facility
up through and including the twelve month anniversary thereof on the unused portion of the Delayed Draw Term Loan, payable quarterly in arrears, and on
the date upon which the Delayed Draw Term Loan is terminated, as well as other fees.
The Pre-Petition Credit Facility required the Company first to prepay outstanding Term Loan A loans in full, including any applicable fees, interest and
expenses and, to the extent that no Term Loan A loans remain outstanding, Term Loan B loans, including any applicable fees, interest and expenses, with,
subject to certain conditions and exceptions, 100% of the net cash proceeds the Company receives from any sale, transfer or other disposition of any assets,
subject to certain reinvestment rights, 100% of net casualty insurance proceeds, subject to certain reinvestment rights and 100% of the net cash proceeds the
Company receives from the issuance of debt obligations and preferred stock. In addition, the Pre-Petition Credit Facility required it to prepay outstanding Term
Loans on the date the Company delivered a compliance certificate pursuant to the Pre-Petition Credit Facility beginning with the fiscal quarter ended June 30,
2009 demonstrating that the Company’s leverage ratio for the preceding quarter was greater than 3.50 to 1.00, with an amount equal to the greater of (i)
$11,250,000 or (ii) 90% of the Company’s excess cash flow calculated after its permitted dividend payment and less its amortization payments made on the
Term Loans pursuant to the Pre-Petition Credit Facility. Notwithstanding the foregoing, the Company may have designated the type of loans which were to be
prepaid and the specific borrowings under the affected facility pursuant to which any amounts mandatorily prepaid would have been applied in forward order
of maturity of the remaining amortization payments.
Voluntary prepayments of borrowings under the Term Loan facilities and optional reductions of the unutilized portion of the revolving facility commitments
would have been permitted upon payment of an applicable payment fee, which shall only be applicable to certain prepayments of borrowings as described in
the Pre-Petition Credit Facility.
Under the Pre-Petition Credit Facility, the Company was required to meet certain financial tests, including a minimum cash interest coverage ratio and a
maximum total leverage ratio. The Pre-Petition Credit Facility contained customary affirmative covenants. The Pre-Petition Credit Facility also contained
negative covenants and restrictions, including, among others, with respect to redeeming and repurchasing the Company’s other indebtedness, loans and
investments, additional indebtedness, liens, capital expenditures, changes in the nature of the Company’s business, mergers, acquisitions, asset sales and
transactions with affiliates. The Pre-Petition Credit Facility contained customary events of default, including, but not limited to, failure to pay principal,
interest or other amounts when due (subject to customary grace periods), breach of covenants or representations, cross-defaults to certain other indebtedness in
excess of specified amounts, judgment defaults in excess of specified amounts, certain ERISA defaults, the failure of any guaranty or security document
supporting the Pre-Petition Credit Facility and certain events of bankruptcy and insolvency.
Scheduled amortization payments on our Pre-Petition Credit Facility began in 2009. No principal payments were due on the Pre-Petition Notes prior to their
maturity. As a result of the Chapter 11 Cases, the Company has not made any additional principal or interest payments on its pre-petition debt.
For the year ended December 31, 2009, the Company repaid $8.4 million of principal under the Term Loan A Facility and $6.1 million of principal under
the Term Loan B Facility.
Prior to the filing of the Chapter 11 Cases, the Company failed to make principal and interest payments due under the Pre-Petition Credit Facility on
September 30, 2009. The failure to make the principal payment on the due date and failure to make the interest payment within five days of the due date
constituted events of default under the Pre-Petition Credit Facility. An event of default under the Pre-Petition Credit Facility permitted the lenders under the Pre-
Petition Credit Facility to accelerate the maturity of the loans outstanding thereunder, seek foreclosure upon any collateral securing such loans and terminate
any remaining commitments to lend to the Company. The occurrence of an event of default under the Pre-Petition Credit Facility constituted an event of default
under the Swaps. In addition, the Company failed to make payments due under the Swaps on September 30, 2009, which failure resulted in an event of
default under the Swaps upon the expiration of a three business day grace period.
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