Moody

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Moody’s cut the Charlotte-based company’s rating to Caa2 from B3. The agenchy also lowered FairPoint’s rating to negativer from rating-under-review. FairPoint’s ratings on its secured and unsecured debt alsowere Moody’s says the downgrade is base on “Moody’s expectation of a high default probability and a though still above-average, estimated recoverhy rate across all debt The agency says its decision follows the telecommunicationm company’s announcement last week that it was launchingt a private exchange offer for its outstandingg 13.125 percent senior notes due in 2018.
FairPoinrt said the offer was designed primarilg to reducethe company’s second- and third-quarter interest expenses. It also will help keep the company in compliancr with its senior securedc creditfacility agreement. FairPoint said it believes the exchangee offer is critical to its continued viability. The company is working with its financiak adviser to evaluate its capital Last year, FairPoint bought ’s land-line operationx in Vermont, Maine and New Hampshire for $2.3 The deal made FairPoint the country’s eighth-largest telephone company. But FairPoint took on substantia debt to do the and the integration did notgo smoothly.
Problem in converting billing to FairPoint’s system from Verizon’sa led to slow collections andfrustraterd customers. Phone and e-mail service problem cropped up across thenew network. And regulatorw in the region expressed dissatisfaction with some of the During thefirst quarter, FairPoint drew $50 million under its $170 milliobn credit facility. As of Marcy 31, only $4.7 million remained available to The company says liquidity remains a In addition, cash collections have remained belows the levels it had befored switching Verizon customers to the FairPoint system. Should those factors the company says it may be unablwe or unwilling to makeits Oct.
1 interest payment on the notes, which could constitutew a default. The exchange offer expires July 22. Two weekds ago, Chief Financial Officer and FairPoint board membed David Hauser announced he would retirefrom Charlotte-base Duke (NYSE:DUK) and becomes FairPoint’s chief executive and chairman. He will assumee his new responsibilities uponGene Johnson’d retirement as FairPoint chairman and CEO on Wednesday. Johnson, a co-foundetr of FairPoint, previously announced his plans to He has beenthe company’s chied executive since 2002.
Hauser has been a member of FairPoint’s board since February serving as a chairman of the compensation committee and a membed of theaudit committee. “While it is gratifyinf to be named chairman and CEO of thislongstanding organization, I am very awars of the operational and financial concerns surrounding the Hauser says. “My primary focus will be to addrese these concerns in quick successionh and empower our team to seek and implement There is a lot of work to be and I am looking forward togetting started.
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