FairPoint seeks loan amendment to modify interest coverage and leverage ratios

By Sara Rosenberg

New York, Feb. 20 - FairPoint Communications Inc. is seeking an amendment to its credit facility to revise the interest coverage and leverage ratios, according to an 8-K filed with the Securities and Exchange Commission Wednesday.

The interest coverage ratio would be changed to no less than 2.00:1.00 for any fiscal quarter ending after Dec. 31 and on or prior to Dec. 31, 2008, and 1.75:1.00 for any fiscal quarter ending after Dec. 31, 2008.

The leverage ratio would be changed to a maximum of 6.25:1.00 for any quarter ending after Dec. 31.

In addition, the amendment would provide flexibility with respect to expenditures related to the merger with Verizon Communications Inc.'s wireline operations in Maine, New Hampshire and Vermont during the three months ending March 31 and provide accommodations for certain restructuring charges that would be incurred by the company if the merger is not consummated.

Currently, the company expects the merger to close in March.

In order to obtain the amendment, the company expects that it will have to, among other things, increase restrictions on dividend payments and stock repurchases, increase excess cash flow sweeps and increase mandatory prepayments from proceeds of debt and equity issuances.

Deutsche Bank is the administrative agent on the deal.

FairPoint is a Charlotte, N.C., provider of communications services to rural communities.

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