Frontier Communications recently announced it and its direct and indirect subsidiaries voluntarily filed for Chapter 11 bankruptcy. The telecommunications company filed in order to enact a plan where bondholders would help reduce its debt by more than $10 billion. This restructuring plan is expected to provide Frontier with financial flexibility to support continued investment in its long-term growth.
Additionally, Frontier will file several customary first day motions with the Bankruptcy Court. These motions would let the company maintain operations in the normal course of businesses without disrupting its relationships with its customers, vendors and employees. Frontier expects the Court to approve the requests. Frontier plans to continue to service its customers without interruption and work with its business partners in normal fashion through the process. The company announced it has sufficient liquidity to meet its current obligations.
“We are undertaking a proactive and strategic process with the support of our bondholders to reduce our debt by over $10 billion on an expedited basis,” Robert Schriesheim, Chairman of the Finance Committee of the Board of Directors said in a statement. “We are pleased that constructive engagement with our bondholders over many months has resulted in a comprehensive recapitalization and restructuring. We do not expect to experience any interruption in providing services to our customers.
“With a recapitalized balance sheet, we will have the financial flexibility to reposition the company and accelerate its transformation by allocating capital resources and adding talent to enhance our service offerings to our customers while optimizing value for our stakeholders. Under the (restructuring support agreement), our trade vendors will be paid for goods and services provided both before and after the filing date.”
Frontier also received commitments for $460 million in debtor-in-possession (DIP) financing—bringing the company’s liquidity to more than $1.1 billion between its cash on hand and the DIP financing. The company expects this liquidity, along with its ongoing operations generated cash flow, to be enough to meet its operational and restricting needs.
Frontier to move forward with asset sale to Northwest Fiber
The company also announced it intends to go forward with selling its Washington, Oregon, Idaho and Montana operations and assets to Northwest Fiber for $1.352 billion in cash on or around April 30. It will need court approval to complete the transaction on an expedited basis, however.
“With this agreement with our Bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” Frontier President and CEO Bernie Han said in a statement. “At the same time, the COVID-19 pandemic continues to impact the entire business community, and our team is focused on ensuring the health and safety of our employees and customers. The services we provide to our customers keeps them connected, safe and informed, and I would like to thank our team for their continued dedication, especially in light of the current environment.”