4frp_logo.jpgInvestor apathy that came hard on the heels of allegations of disservice leveled against FairPoint Communications, Inc. (PinkSheets: FRCMQ) by three states of New England is likely to persist as the company appeared before the Bankruptcy Court in New York on Tuesday seeking protection while it executes a restructuring operation. The major objective of this move is to avert at least $1 billion of indebtedness to lenders who hold 50 percent of the balance due while they help themselves to 98 percent of equity in the communications services provider.

 The North Carolina-headquartered company expects to carry on its business as usual for the duration of the Chapter 11 process, partly on $75 million worth of debtor-in-possession financing from unnamed lenders.
Furthermore, FairPoint said it also filed for motions that will allow a continued compensation and benefits to workers, as well as payments for all goods and services purchased before the voluntary filing of bankruptcy protection. The firm reported $46 million available at present.

 “We want to assure our customers, employees and vendors that we remain committed to continuing to provide reliable, uninterrupted service to all of our customers”, announced FairPoint chairman and CEO, David Hauser. He continued to say this initiative would in the long run have a positive bearing on the company’s balance sheet and market share.

  FairPoint’s failure to service its debt obligations can be traced back to the time when the company’s revenues declined in the wake of poor servicing of land lines, particularly in New England where it had taken over the monopoly of the network from Verizon Communications, Inc. This 2008 transaction turned FairPoint to a major player in communications, with control over telephone and internet utilities in 18 states and about 1.7 million clients. At the time of writing FRCMQ stock was trading for $0.15 from $0.11 of the day before.
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 Reference:
 http://652fpye.fairpoint.com/