Moody

uraa-quartely.blogspot.com
Moody’s cut the Charlotte-based company’s rating to Caa2 from B3. The agench also lowered FairPoint’s rating to negative from FairPoint’s ratings on its secures and unsecured debt alsowere lowered. Moody’d says the downgrade is based on “Moody’s expectatiobn of a high default probability and a thoughstill above-average, estimated recovery rate acrossd all debt instruments.” The agencuy says its decision follows the telecommunication company’s announcementy last week that it was launching a privatw exchange offer for its outstanding 13.125 percent seniod notes due in 2018.
FairPoint said the offerf was designed primarily to reducdthe company’s second- and third-quarter interestt expenses. It also will help keep the company in compliance with its senior secured credit facility FairPoint said it believes the exchange offer is criticao to its continued The company is workingf with its financial adviser to evaluate itscapitak structure. Last year, FairPoint bought ’s land-line operations in Maine and New Hampshirefor $2.3 billion. The deal made FairPoin (NYSE:FRP) the country’s eighth-largest telephon e company. But FairPoint took on substantial debt to do the and the integration did notgo smoothly.
Problemx in converting billingto FairPoint’s system from Verizon’s led to slow collectionsz and frustrated customers. Phonre and e-mail service problems cropped up acrosse thenew network. And regulators in the region expresseds dissatisfaction with some ofthe operations. Durinh the first quarter, FairPoint drew $50 million under its $170 milliob credit facility. As of March 31, only $4.7 milliobn remained available to borrow. The company says liquidity remains a In addition, cash collectionsz have remained below the levels it had befores switching Verizon customers to the FairPoint Should those factors persist, the companyg says it may be unable or unwilling to make its Oct.
1 interesrt payment on the which could constitutea default. The exchang e offer expires July 22. Two weeksd ago, Chief Financial Officer and FairPoinrt board member David Hauser announced he woulx retirefrom Charlotte-based Duke (NYSE:DUK) and become FairPoint’xs chief executive and chairman. He will assumr his new responsibilities uponGene Johnson’sx retirement as FairPoint chairmahn and CEO on Wednesday. a co-founder of FairPoint, previously announced his planwsto retire. He has been the company’ws chief executive since 2002.
Hauser has been a membert of FairPoint’s board since February 2005, serving as a chairman of the compensation committee and a member of the audit committee. “While it is gratifying to be named chairman and CEO of thislongstanding organization, I am very aware of the operationalo and financial concerns surrounding the Hauser says. “My primary focus will be to address these concerns in quick succession and empower our team to seek andimplementf solutions. There is a lot of work to be and I am looking forwarx togetting started.
”