Frontier Communications announced Tuesday night it had filed for Chapter 11 bankruptcy protection in the Southern District of New York, adding that it expects to continue providing service without interruption during the process.
Frontier said the plan calls for the company to slash its debt by more than $10 billion and that it has secured commitments for $460 million in debtor-in-possession financing. With $700 million of cash-on-hand factored in, Frontier said it enters the process with $1.1 billion in total liquidity.
Frontier said it is moving ahead with the restructuring with approval from more than 75% of its bondholders representing about $11 billion in outstanding unsecured bonds.
Frontier said it expects to provide service to customers without interruption and "work with its business partners as usual throughout the court-supervised process." It also believes it has enough liquidity to meet ongoing obligations, noting that "trade vendors will be unimpaired for both pre- and post-petition obligations."
Even as it restructures, Frontier is pushing ahead with the sale of its Washington, Oregon, Idaho and Montana operations and assets to Northwest Fiber for $1.3 billion, with an expected close on April 30.
Leading up to the filing, Frontier told investors that a "significant under-investment in fiber" and network upgrades and its reliance on legacy infrastructure (including DSL) played big roles in putting the company behind the 8-ball. Frontier said it hopes a restructuring and revised strategic vision will improve the company's outlook. Among the strategic initiatives being weighed, Frontier is exploring fiber builds to about 3 million incremental households, with about $1.4 billion in estimated cumulative build capex requirements through 2024. On the wireless backhaul side, Frontier is envisioning about 9,000 new sites by 2024.
On Tuesday, Frontier said it believes the restructuring will return the company to growth.
"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," Robert Schriesheim, chairman of the finance committee of the board of directors, said in a statement.
"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," added Frontier President and CEO Bernie Han. "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."
- Frontier inches toward bankruptcy
- Frontier preps for new chapter
- McCarthy out as Frontier CEO, replaced with Bernie Han
— Jeff Baumgartner, Senior Editor, Light Reading