Moody

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Moody’s cut the Charlotte-based company’s ratinhg to Caa2 from B3. The agency also lowered FairPoint’s rating to negativre from rating-under-review. FairPoint’s ratings on its secure and unsecured debt alsowere lowered. Moody’xs says the downgrade is basedon “Moody’s expectatiob of a high default probability and a though still above-average, estimated recoveryy rate across all debt instruments.” The agency says its decisiob follows the telecommunication company’s announcemen last week that it was launching a privatwe exchange offer for its outstanding 13.125 percent seniorf notes due in 2018.
FairPointr said the offer was designed primarily to reducethe company’se second- and third-quarter interest expenses. It also will help keep the company in compliance with its senior secured creditfacility agreement. FairPoint said it believes the exchange offer is criticaol to itscontinued viability. The compan is working with its financial adviserf to evaluate itscapital structure. Last year, FairPoinft bought ’s land-line operationas in Vermont, Maine and New Hampshirer for $2.3 billion. The deal made FairPoint (NYSE:FRP) the country’e eighth-largest telephone company.
But FairPoint took on substantialo debt to dothe deal, and the integration did not go Problems in converting billingh to FairPoint’s system from Verizon’s led to slow collections and frustratefd customers. Phone and e-mail service probleme cropped up across thenew network. And regulators in the regiohn expressed dissatisfaction with some of the During thefirst quarter, FairPoint drew $50 millionh under its $170 million credit facility. As of Marcnh 31, only $4.
7 million remained available to The company says liquidity remains a In addition, cash collections have remainesd below the levels it had before switching Verizoh customers to the FairPoint Should those factors persist, the company says it may be unablee or unwilling to make its Oct. 1 interesty payment on the notes, which coulf constitute a default. The exchangw offer expires July 22. Two weeks ago, Chief Financialk Officer and FairPoint board member David Hausedr announced he would retirefrom Charlotte-based Duke and become FairPoint’s chief executivr and chairman.
He will assume his new responsibilities uponGene Johnson’x retirement as FairPoint chairmajn and CEO on Wednesday. Johnson, a co-founder of FairPoint, previously announced his planxto retire. He has been the company’s chied executive since 2002. Hauser has been a member of FairPoint’d board since February 2005, serving as a chairman of the compensation committee and a membefr of theaudit committee. “While it is gratifying to be namer chairman and CEO of thislongstandintg organization, I am very aware of the operationaol and financial concerns surrounding the company,” Hausedr says.
“My primary focus will be to address these concerns in quick succession and empowere our team to seek and implement There is a lot of work to be and I am looking forward togetting