FairPoint Communications 2013 Annual Report Download - page 22

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Risks Related to our Common Stock and Our Substantial Indebtedness
The price of our common stock may be volatile and may fluctuate substantially, which could negatively affect holders of our
common stock.
The market price of our common stock may fluctuate widely as a result of various factors including, but not limited to,
period-to-period fluctuations in our operating results, the volume of sales of our common stock, the limited number of holders of
our common stock and the resulting limited liquidity in our common stock, dilution, developments in the communications industry,
the failure of securities analysts to cover our common stock, changes in financial estimates by securities analysts, short interests
in our common stock, competitive factors, regulatory developments, economic and other external factors, general market conditions
and market conditions affecting the stock of communications companies in general. Communications companies have, in the past,
experienced extreme volatility in the trading prices and volumes of their securities, which has often been unrelated to operating
performance. High levels of market volatility may have a significant adverse effect on the market price of our common stock. In
addition, in the past, securities class action litigation has often been instituted against companies following periods of volatility
in their stock prices. This type of litigation could result in substantial costs and divert management's attention and resources, which
could have a material adverse impact on our business, financial condition, results of operations, liquidity and/or the market price
of our common stock.
We have substantial indebtedness which could have a negative impact on our financing options and liquidity position and
prevent us from fulfilling our obligations under our indebtedness.
As of December 31, 2013, our total gross indebtedness was approximately $937.1 million (including approximately $1.9
million of capital leases) and $59.1 million was available for borrowing under the New Revolving Facility, net of $15.9 million
outstanding letters of credit. Our substantial indebtedness could have important consequences including:
• making it more difficult for us to satisfy our obligations under our debt agreements;
• requiring us to dedicate a significant portion of our cash flow from operations to paying the principal of and interest on
our indebtedness, thereby limiting the availability of our cash flow to fund future capital expenditures, working capital
and other corporate purposes;
• limiting our ability to obtain additional financing in the future for working capital, capital expenditures or acquisitions;
• limiting the amount of dividends we could pay to our stockholders;
• limiting our ability to refinance our indebtedness on terms acceptable to us or at all;
• restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
• limiting our flexibility in planning for, or reacting to, changes in our business and the communications industry generally;
• placing us at a competitive disadvantage compared with competitors that have a less significant debt burden; and
• making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures.
Our ability to continue to fund our debt service requirements and to reduce our indebtedness may be affected by general
economic, financial market, competitive, legislative and regulatory factors, among other things. An inability to fund our debt
service requirements, reduce our indebtedness or satisfy debt covenant requirements could have a material adverse effect on our
business, financial condition, results of operations, liquidity and/or the market price of our outstanding securities.
In addition, our borrowings under our New Credit Agreement bear interest at a variable rate based on a British Bankers
Association LIBOR rate ("LIBOR"), subject to a floor of 1.25%. We have entered into interest rate swap agreements that effectively
fix the interest rate on a combined notional amount of $170.0 million of these borrowings; however, these agreements are not
effective until September 30, 2015. If the relevant LIBOR increases above the level of the floor, the interest payments on our
variable rate debt will increase and adversely affect our cash flow. Conversely, while LIBOR remains below 1.25%, we may incur
interest costs above market rates. While our interest rate swap agreements and any future agreements we enter into may limit our
exposure to higher interest rates, these agreements may not offer complete protection from this risk.
Despite our substantial indebtedness level, we may be able to incur significant additional amounts of debt, which could
further exacerbate the risks associated with our substantial indebtedness.
We may be able to incur substantial additional indebtedness in the future. Although the Indenture and our New Credit
Agreement contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant
qualifications and exceptions and, under certain circumstances, the amount of indebtedness that could be incurred in compliance
with these restrictions could be substantial. If new debt is added to our existing debt levels, the related risks that we now face
could increase.