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FairPoint considers bankruptcy

06/29/09


FairPoint Communications could file for bankruptcy unless its lenders agree to postpone interest payments due on $531 million in loans.

North Carolina-based FairPoint, which last year took over Verizon's landline phone network in Northern New England for $2.3 billion, expects it will not be able to pay the interest due in October, according to a Wednesday filing with the Securities and Exchange Commission. If its debt holders refuse to wait for payment, the company will be forced to restructure, a move that could include bankruptcy.

The filing marks the first time that FairPoint has directly raised the prospect of bankruptcy. The company has asked its lenders to exchange their notes for new loans on an extended repayment schedule. At least 95% of the company's lenders must agree to the offer to avoid restructuring, the filing states.

Fairpoint, which has been plagued with consumer complaints in recent months, earned revenue of $311.6 million in the first quarter, down 2.4% from the fourth quarter of 2008.

 

 
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