FairPoint Communications 2011 Annual Report Download - page 8

Table of Contents
governing (a) the 13-1/8% Senior Notes due April 1, 2018 (the “Old Notes”), which were issued pursuant to the Indenture, dated as of March 31, 2008, by
and between Spinco and U.S. Bank National Association, as amended, and (b) the 13-1/8% Senior Notes due April 2, 2018 (the “New Notes” and, together
with the Old Notes, the “Pre-Petition Notes”) and (iv) the termination by its conversion into the revolving facility of the Credit Agreement (as defined below) of
the Debtor-in-Possession Credit Agreement, dated as of October 27, 2009 (as amended, the “DIP Credit Agreement”), by and among FairPoint
Communications and FairPoint Logistics, Inc. (“FairPoint Logistics”, and together with FairPoint Communications, the “DIP Borrowers”), certain financial
institutions (the “DIP Lenders”) and Bank of America, N.A., as the administrative agent for the DIP Lenders (the “DIP Administrative Agent”). Our New
Common Stock began trading on the Nasdaq Stock Market LLC (the “NASDAQ”) on January 25, 2011. In addition, on the Effective Date, FairPoint
Communications and FairPoint Logistics (collectively, the “Borrowers”) entered into a $1,075.0 million senior secured credit facility with a syndicate of
lenders and Bank of America, N.A., as the administrative agent for the lenders, arranged by Banc of America Securities LLC (the “Credit Agreement”). In
connection with the Chapter 11 Cases, we also negotiated with representatives of the state regulatory authorities in Maine, New Hampshire and Vermont with
respect to (i) certain regulatory approvals relating to the Chapter 11 Cases and the Plan and (ii) certain modifications to the requirements imposed by state
regulatory authorities as a condition to approval of the Merger (each a “Merger Order,” and collectively, the “Merger Orders”). We agreed to regulatory
settlements with the representatives for each of Maine, New Hampshire and Vermont regarding modification of each state’s Merger Order (each a “Regulatory
Settlement,” and collectively, the “Regulatory Settlements”) which were then approved by the regulatory authorities in these states. For more information
regarding the Regulatory Settlements, see “Item 1. Business – Regulatory Environment – State Regulation – Regulatory Conditions to the Merger, as Modified
in Connection with the Plan.”
As of the Effective Date, we were required to adopt fresh start accounting in accordance with guidance under the applicable reorganization accounting
rules, pursuant to which our reorganization value, which represented the fair value of the entity before considering liabilities, and approximates the amount a
willing buyer would pay for the assets of the entity immediately after the reorganization, was allocated to the fair value of assets in conformity with guidance
under the applicable accounting rules for business combinations, using the purchase method of accounting for business combinations. The amount remaining
after allocation of the reorganization value to the fair value of identified tangible and intangible assets was reflected as goodwill, which is subject to periodic
evaluation for impairment. In addition to fresh start accounting, our post-emergence consolidated financial statements reflect all effects of the transactions
contemplated by the Plan. Therefore, our post-emergence consolidated statements of financial position and consolidated statements of operations are not
comparable in many respects to our consolidated statements of financial position and consolidated statements of operations for periods prior to our adoption of
fresh start accounting and prior to accounting for the effects of the reorganization, including the historical financial statements contained herein.

We offer a broad portfolio of communications services for residential, business (includes governmental and educational institutions) and wholesale
customers in each of the markets in which we operate. We have a long history of operating in our markets and have a recognized identity within each of our
service areas. Our operating companies are locally staffed, which enables us to reliably provide an array of communications services to meet our customer
needs. These include voice and voice related services, as well as HSD, Internet access, data transport, video and other broadband enabled services. Based on
our understanding of our local customers’ needs, we offer bundled services designed to simplify the customer’s purchasing and management process.

We primarily generate revenue through: (i) the provision of local voice service to customers within our service areas; (ii) the provision of network access
through dedicated transport facilities for data and voice to business and wholesale customers and to interexchange carriers for origination and termination of
interstate and intrastate long-distance phone calls; (iii) HSD services; (iv) Universal Service Fund high-cost loop and high-cost model payments; and (v) the
provision of other services such as long-distance resale, other data and Internet and broadband enabled services, enhanced services and billing and collection
services.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report for more information
regarding our revenue sources.
7