By MIKE BARRIS
FairPoint Communications Inc. said it is in talks with some of its lenders about restructuring its debt, a deal which could lead to a bankruptcy filing, as it announced $42 million in interest and other payments may not be made Wednesday.
The phone company has been weighed down by its $2.3 billion acquisition in early 2008 of Verizon Communications Inc.’s landlines in New England. The acquisition, which roughly quintupled FairPoint’s size to 1.8 million landlines, took it from being a small rural operator to the eighth-largest U.S. phone company by number of landlines.
But taking on that debt took place just before credit markets became constrained, making refinancing efforts difficult. Meanwhile, the landline business nationally continues to lose customers.
FairPoint, which is based in Charlotte, N.C. and operates in 18 states, said Monday its third-quarter results likely won’t meet covenant requirements.
It said lenders that collectively hold more than 50% of loans and commitment under the company’s bank credit facility have agreed to wait until Oct. 30 before taking action such as accelerating maturity dates.
FairPoint Chairman and Chief Executive David Hauser, who joined the company earlier this year, said the moves show the talks are progressing in a “positive manner” and allow “additional time for a permanent restructuring plan to be resolved.”
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