UPDATE Frontier Communications received approvals on an interim basis from the U.S. Bankruptcy Court for the Southern District of New York for motions related to its voluntary Chapter 11 petitions. Frontier filed the documents on April 14.
Among other things, the Court has authorized Frontier to continue paying employee wages and providing healthcare and other benefits, as well as to retain certain customer programs. As previously announced, the company obtained commitments for $460 million in debtor-in-possession (DIP) financing. Subject to Court approval, Frontier’s liquidity will total over $1.1 billion, comprising the DIP financing and the company’s more than $700 million cash on hand.
“We are pleased to have received approval of our First Day motions, which will allow the business to continue operating, providing important services to our customers without interruption and maintaining our long-standing relationships with our vendors and business partners,” said Robert Schriesheim, Chairman of the Finance Committee of the Board of Directors. “Our comprehensive restructuring plan will result in a recapitalized balance sheet with a $10 billion reduction in our debt on an expedited basis.” That, he said, will enhance Frontier’s financial flexibility and facilitate the ability to reposition the company.
Inside Towers reported Frontier entered into a Restructuring Support Agreement (RSA) with bondholders representing more than 75 percent of Frontier’s approximately $11 billion in outstanding unsecured bonds. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that leaves unimpaired, all general unsecured creditors and holders of secured and subsidiary debt.
Under the RSA, the bondholders agreed to support implementation of a plan that’s expected to reduce the company’s debt by more than $10 billion and provide significant financial flexibility to support continued investment in its long-term growth.