Frontier Communications said Monday that it would invoke a 60-day grace period to pay its bond debt due March 16, a move that many believe could be the first steps in restructuring its debt, including a bankruptcy filing.
Frontier was scheduled to make a $320 million interest payment on its bond debt on March 15, a payment that many have speculated it cannot make. The company has been trying to restructure about $17.5 billion in outstanding debt, much of that incurred after it agreed to buy Verizon Communications’ Fios business in three states in 2015. That deal closed in 2016.
In a statement on March 16, Frontier said it would take advantage of the 60-day grace period on its interest payment, adding that it continues to hold talks with bondholders as it works to “reach a comprehensive resolution.”
“We remain actively engaged in constructive discussions with our bondholders as the Company continues to evaluate its capital structure with an eye to reducing debt and interest expense,” Frontier continued in its statement. “...Importantly, we continue to provide quality service to our customers without interruption and work with our business partners as usual.”
In the meantime, Frontier stock continued to fall, dipping 20% (7 cents per share) to $27 cents each on March 16. The stock has been trading under $1 per share since Oct. 31.
In December Frontier hired former Dish Network executive Bernie Han as CEO. According to reports, Han has been working hard to restructure Frontier’s debt. Bloomberg reported that Frontier is negotiating terms of a debtor in possession loan that would allow it to continue operating through a bankruptcy filing.
But just when that filing would come is up in the air. Frontier had been expected to file for Chapter 11 restructuring in March, possibly before the interest payment came due, but that hasn’t happened. According to Bloomberg, the company has another interest payment due April 1 (with a 30-day grace period) and one due April 15 (without a grace period). That could mean that the telecom company would file for protection around the middle of next month.
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