The deal represents 75% of Frontier’s approximately $11 billion in outstanding unsecured bonds.
Under the terms of the RSA, the bondholders have agreed to support a plan that will reduce the company’s debt by more than $10 billion and provide financial flexibility to support continued investment in its long-term growth.
The news follows the company’s voluntarily filed petitions under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York, earlier this month.
At the time the company said the filing was to “generate sufficient liquidity from the restructuring to meet our obligations and operating needs”.
In conjunction with the RSA, Frontier plans to sell its Washington, Oregon, Idaho, and Montana operations and assets to Northwest Fiber for $1.352 billion in cash. The deal is expected on or around April 30, 2020.
With the RSA trade vendors will be will remain unaffected for both pre- and post-petition obligations, the company says it will continue to provide quality services to its customers.
“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 recapitalisation and restructuring. We do not expect to experience any interruption in providing services to our customers,” said Robert Schriesheim, chairman of the finance committee of the board of directors.
“With a recapitalised 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 optimising 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.”
In addition to the restructuring Frontier received pledges of $460 million in debtor-in-possession financing. Once the court has approved the plan, the company’s liquidity will total over $1.1 billion comprising of DIP financing and the company’s more than $700 million in cash.
“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 (pictured), president and chief executive officer at Frontier Communications.
“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.”
