Debt-wracked US telco Frontier Communications has announced that, together with its subsidiaries, it has entered into a Restructuring Support Agreement (RSA) with bondholders representing more than 75% of its approximately USD11 billion in outstanding unsecured bonds. The telco notes: ‘Under the RSA, the bondholders have, subject to certain terms and conditions, agreed to support implementation of a plan that is expected to reduce the company’s debt by more than USD10 billion and provide significant financial flexibility to support continued investment in its long-term growth.’
To implement the plan, the company and its direct and indirect subsidiaries voluntarily filed petitions under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York. Frontier expects to continue providing service to its customers without interruption and work with its business partners as usual throughout the court-supervised process. The company has sufficient liquidity to meet its ongoing obligations.
In conjunction with the proposed financial restructuring, Frontier has received commitments for USD460 million in debtor-in-possession (DIP) financing. Following court approval, the company’s liquidity will total over USD1.1 billion comprising the DIP financing and the company’s more than USD700 million in cash on hand. This liquidity, combined with cash flow generated by Frontier’s ongoing operations, is expected to be available and sufficient to meet the telco’s operational and restructuring needs.
In addition, Frontier intends to proceed with the sale of its Washington, Oregon, Idaho, and Montana operations and assets to Northwest Fiber for USD1.352 billion in cash, subject to certain closing adjustments, on or around 30 April 2020, and will seek court approval to complete the transaction on an expedited basis.