According to an article in the Star-Telegram, FairPoint Communications filed for Chapter 11 bankruptcy protection Monday after agreeing to a debt reduction deal with its creditors that will lower its debt by 62 percent. FairPoint, owns and operates phone companies in 18 states with a total of 1.65 million lines. The company has been struggling to repay its large debt load while its revenues have continued to fall. Because of this the FairPoint bankruptcy filing has been expected.
The article said:
"The restructuring deal with lenders holding more than half of its outstanding secured debt will allow the company to reduce its debt from $2.7 billion to $1 billion, CEO David Hauser told The Associated Press. "What that will do is cause a significant decrease in costs to the company because interest expenses will drop a lot," Hauser said."
Before filing for bankruptcy FairPoint Communications asked its 3,000 union employees to accept pay cuts and other concessions in its efforts to avoid bankruptcy. Those negotiations were unsuccessful in preventing their bankruptcy. Many FairPoint workers may see forced changes in their employee contracts during the bankruptcy, not to mention possible tweaks to pension/retirement obligations. In the meantime, expect job losses amongst the company's non-union employees as FairPoint struggles to survive and emerge from bankruptcy as a viable entity.