Tuesday, February 11, 2020

"‘Strong likelihood’ Frontier will file soon for bankruptcy" $FTR

Local news article in Utah:

During a conference with the Utah Public Service Commission on Jan. 22, representatives with Frontier and investigators told commissioners that a “strong likelihood exists” that Frontier Communications’s parent company “will file soon for bankruptcy,” resulting in the discovery phase of the investigation being delayed.
The Frontier shares are down to 59 cents. Bond prices:
So the bond prices also imply that they file instead of paying any 2020 maturities.

Previously on FTR:


Ponch73 said...

Any thoughts on why the stock still has a bid? Do you think that the equity markets are assuming some residual value left over after restructuring?

CP said...

Look at SHLDQ. People won't stop paying real money for a stock until you physically take away their ability to do so.

eahilf said...


"Frontier sits on massive $17.5 Billion legacy debt Load. -- The majority of Frontier unsecured debt trades at 45 to 47 cents/dollar (as of Dec 13.2019). -- My Conclusion: Unsecured Note holders will be lucky to get 7 cents on the dollar; Senior Secured holders 24 cents on the dollar."

So what was all that "legacy debt" used for?

CP said...

Curious, what's the guy's thesis that the bonds are going to get 7 cents? I think they are overvalued in the high 40s, but not that overvalued.

Anonymous said...

Frontier Communications Corp. paid interest due Feb. 15 on its bonds maturing in 2026 and 2031 as the telecom services provider continues restructuring talks with
creditors, according to people familiar with the situation.
* Frontier made coupon payments on its 6.8% notes due 2026 and 9% notes due 2031, the people said, who asked not to be identified discussing a private matter
* Certain lenders signed confidentiality documents that restrict their ability to trade as the company continues negotiations for a potential bankruptcy filing around mid-March, said the people
* Frontier’s bonds are trading slightly higher Tuesday, though several are still quoted below 50 cents on the dollar, according to Trace

Anonymous said...

Frontier Communications Corp.’s largest union called for the struggling telecom company to adopt a restructuring plan that would free up funds for operations by
converting most of its unsecured debt into stock. The Communication Workers of America, which has about 8,500 Frontier employees across 18 states, said 80% of the company’s nearly $12 billion of unsecured debt should be swapped for equity, according to comments on a conference call Thursday. Such a restructuring would produce “billions of dollars” to fund improvements that the company desperately needs to make in its phone and broadband network, according to CWA analyst Randy
Barber. The union understands an equitization of that size has been under discussion with creditors, Barber said. A representative for Norwalk, Connecticut-based Frontier couldn’t immediately comment.

Converting the unsecured debt to shares would mean overwhelming dilution for current shareholders of Frontier, whose market value has shrunk to about $63 million.
Frontier has already asked creditors to help craft a restructuring that would likely include filing for bankruptcy by the middle of next month, Bloomberg previously reported. The company relies heavily on copper and fiber-optic landlines to
provide service, and its debt load of more than $17 billion has become a heavy burden as customers switch to wireless networks. Bernie Han, the company’s new chief executive officer, is under pressure to act before March 15, when about $356 million of debt payments are due.

Frontier’s unionized workers said capital spending is essential to make up for shortfalls that have led to longer repair times for customers and lost business. The CWA has attempted to meet with Han but has so far been rebuffed, according to union president Chris Shelton.

“We’re eager to work with new management to build this company up, but we will not stand by for more years of neglect and mismanagement,” Shelton said on the call. The company’s workers in New York and California will be renegotiating their contracts later this year.

Debt Service

David Weidlich, a former sales and service technician with more than 35 years of experience, said AT&T Inc. and Frontier were both healthy companies when Frontier bought AT&T’s Connecticut business in 2014. But since the acquisition of California, Texas, and Florida assets from Verizon, the company has reduced investment in its operations to service its debt, he said.

Those obligations cost Frontier about $1.5 billion of interest annually, according to company filings. A former customer service representative in California said
that after the acquisition by Frontier, she immediately began to see changes that frustrated customers and technicians alike. For example, a new computer program often timed out and wasn’t accurate, and that system is still in use today, said Bonnie Boord, who has been a CWA union member since 1993 and recently retired.

“The problems I’ve seen in my four years under Frontier management go beyond the lack of investment and deterioration of the network,” she said on the call. “Basic management of the workforce and the business have been an ongoing challenge.”

Ponch73 said...

Back in 2015, college students predicted FTR would go bankrupt in 2020.