Murphy – Frontier Communications has filed for Chapter 11 bankruptcy.
Frontier, which was responsible for a loss of emergency 911 communications throughout western North Carolina last year, carries roughly $17 billion in debt, which financial experts say stems from a number of acquisitions. Additionally, the company’s landline revenue has been decreasing, according to a release.
Chapter 11 is a form of bankruptcy that essentially reorganizes a company’s business affairs, debts and assets. Corporations generally file Chapter 11 if they need time to restructure debts, and this version of bankruptcy gives the debtor a fresh start.
In a statement released last week, Frontier officials said they “expect to continue providing quality service to its customers without interruption.” The company – which provides landline telephone and internet services in Cherokee, Clay and Graham counties – maintains a work office on Church Street downtown.
“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,” the release says. “We do not expect to experience any interruption in providing services to our customers.
“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.”
Frontier officials say the agreement with bondholders will allow the company to focus on driving “operational efficiencies” and “position our business for long-term growth.” In conjunction with the proposed financial restructuring, Frontier received commitments for $460 million in debtor-in-possession financing.
Following court approval, the company’s liquidity will total more than $1.1 billion. That liquidity, combined with cash flow generated by the company’s ongoing operations, is expected to be sufficient to meet Frontier’s operational and restructuring needs.
Frontier also plans to proceed with the sale of its Washington, Oregon, Idaho and Montana operations and assets to Northwest Fiber for $1.352 billion in cash. That deal is expected to be completed by the end of this month.