US fixed operator Frontier Communications has agreed a debt restructuring plan with its bondholders that is expected to reduce its debt by more than USD 10 billion. The operator will file for Chapter 11 protection from creditors in New York while the plan is executed.
Over 75 percent of holders of Frontier's around USD 11 billion in outstanding unsecured bonds have agreed to the Restructuring Support Agreement. The agreed-upon terms would leave unimpaired all general unsecured creditors and holders of secured and subsidiary debt.
Frontier said it will continue to service customers and pay business partners during the restructuring, and the company has sufficient liquidity to meet its ongoing obligations.
In conjunction with the proposed financial restructuring, Frontier received commitments for USD 460 million in debtor-in-possession financing. Following court approval of the plan, the company’s liquidity will total over USD 1.1 billion including the more than USD 700 million cash on hand. Combined with cash flow generated by ongoing operations, this is expected to be sufficient to meet Frontier’s operational and restructuring needs. The DIP financing agreement provides for the additional financing to convert to a revolving exit facility upon emergence from Chapter 11.
In addition, the company intends to proceed with the sale of its Washington, Oregon, Idaho, and Montana operations and assets to Northwest Fiber for USD 1.352 billion in cash by the end of April and will seek court approval to complete the transaction on an expedited basis.
Frontier announced a month ago it was deferring interest payments as it talked to bondholders on a restructuring. The company said the plan should leave it in a better position for the long term, "with 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".
