CHARLESTON, W.Va. – Frontier Communications has announced that it has filed for Chapter 11 bankruptcy protection.
As part of the filing, Frontier and its subsidiaries have entered into a Restructuring Support Agreement with bondholders representing more than 75% of Frontier’s approximately $11 billion in outstanding unsecured bonds, according to a press release.
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 $10 billion and provide significant financial flexibility to support continued investment in its long-term growth, Frontier stated.
Frontier said it has sufficient liquidity to meet its ongoing obligations. Under the RSA, trade vendors will be unimpaired for both pre and post-petition 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. 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,” said Chairman of the Finance Committee of the Board of Directors Robert Schriesheim. “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 RSA, our trade vendors will be paid for goods and services provided both before and after the filing date.”
“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,” said Bernie Han, President and Chief Executive Officer. “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.”
In conjunction with the proposed financial restructuring, Frontier stated it received commitments for $460 million in debtor-in-possession (“DIP”) financing. Following court approval, Frontier’s liquidity will total more than $1.1 billion comprising the DIP financing and the company’s more than $700 million cash on hand. This liquidity, combined with cash flow generated by Frontier’s ongoing operations, is expected to be available and sufficient to meet its operational and restructuring needs. The DIP financing agreement provides for the additional financing to convert to a revolving exit facility upon emergence, according to the press release.
The Public Service Commission of West Virginia issued a statement in response to the Frontier Chapter 11 bankruptcy.
“Frontier has made the Commission aware of its Chapter 11 bankruptcy filing. The Company stated in a letter to the Commission that the Chapter 11 filing will not interrupt any service to residential, business or wholesale consumers; will not impact Frontier’s ability to provide voice or data service in the state; and will not impact Frontier’s provision of 911 services throughout its service territory. The Company further stated the Chapter 11 filing will not result in a change to the rates or terms of service provided to customers or offered to prospective customers in the normal course of business. Frontier emphasized to the Commission that it is not going out of business, but in fact was taking these steps to position the company for long term success. It further stressed that the eventual reorganization of Frontier through the bankruptcy process was ultimately expected to improve the company’s financial and operational status and enable Frontier to enhance its services to its customers.”
Public Service Commission of West Virginia statement
PSC Chairman Charlotte Lane stated, “All Frontier customers need to know that the bankruptcy filing will not affect their service. The Commission will be closely monitoring this proceeding to ensure that West Virginians will not see any disruption of service.”
Frontier has established a dedicated webpage to provide additional information regarding the restructuring and Chapter 11 process.
