Latest News 2011 January FairPoint Telephone Company Completes Bankruptcy

FairPoint Telephone Company Completes Bankruptcy

FairPoint Communications Inc., a Charlotte, North Carolina based telecommunications company, completed 15 months of bankruptcy reorganization on January 24, as reported by the Associated Press for ABC News from Portland, Maine,

Their Chapter 11 filing leaves in its wake a debt of $1 billion. The debt was reduced by more than half from the original $2.8 billion.  The plan also allows for a credit line of $75 million. 

The reorganization plan was approved by the U.S. Bankruptcy Court in the southern district of New York.  It was effective 11 days after its approval.

Paul Sunu, the chief executive officer at FairPoint Communications said, "We are emerging as a stronger company, focused on our customers, vendors and employees."

Eighteen months after buying Verizon's northern New England telephone and Internet operation, FairPoint filed for bankruptcy.  At the time of the filing FairPoint held ownership of a telephone company that covered 18 states.

FairPoint paid Verizon 2.3 billion for their purchase on October 26, 2009.

FairPoint employed a majority of its 3,500 staff solely in three states: Maine, New Hampshire and Vermont .  The three states represent FairPoint's largest holdings.  In New England they have 1.3 million access lines out of their total 1.6 million access lines.

Some were skeptical of the sudden growth as the Verizon land holding purchase caused FairPoint to grow six fold almost immediately.  A difficulty was immediately predicted.

Due to the U.S. credit crisis, and a botched technology transfer, FairPoint started having trouble.

FairPoint's bankruptcy reorganization allowed them to negotiate with the banks and bondholders regarding their debts.  They also asked union employees to make concessions that would help to defray tremendous costs.

Don Trementozzi, the Portsmouth, New Hampshire president of a union covering 450-members from Maine, New Hampshire and Vermont, the Communication Workers of America Local 1400, said, "I believe that we've done everything in our realm that we could do to allow them to get out of Chapter 11."

Pete Laughlin, of Augusta, Maine, and chairman of an IBEW council representing another 2,000 electrical workers from three states, said, "The International Brotherhood of Electrical Workers will continue to try to find ways to save money to help bolster the company's bottom line."

The New York Stock Exchange suspended all trading of FairPoint stock when the company filed for Chapter 11 protection.  Formerly the stock was traded over the counter.  Now the former stock has since been cancelled and will not be converted into a new common stock. 

The new FairPoint stock has been approved and will be known under the ticker symbol FRP.  The date of new trading for FRP has yet to be announced, but is expected shortly.

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Categories: Chapter 11 Bankruptcy