Thread regarding Frontier Communications Corp. layoffs

Frontier Fuels Speculation on Its Fate by Draining Credit Line

(Bloomberg) – Frontier Communications Corp. added to speculation that it’s headed for a restructuring by posting weak quarterly results and drawing on the rest of its credit line for almost half a billion dollars.

The wireline communications company disclosed Tuesday that it borrowed $499 million that remained in its $850 million revolver during the third quarter. Troubled companies often exhaust their credit lines to build cash ahead of a debt deal or bankruptcy filing – a scenario Frontier has said is possible – and it’s negotiating with creditors about ways to ease its $17 billion debt load.

Frontier boosted its unrestricted cash to $683 million at the end of the quarter by emptying the credit line, even though it generates positive free cash flow and doesn’t face sizable debt payments until March, according to Stephen Flynn, a credit analyst at Bloomberg Intelligence.

Creditors have been pushing Frontier for a plan to tackle its debt, with Robert Citrone’s hedge fund, Discovery Capital Management LLC, arguing that investors will fare better if it files for Chapter 11 sooner rather than later.

Other stakeholders may have written contracts that insure debt holders against default and would like to see the company hold off on filing for court protection until at least next year.

A representative for Norwalk, Connecticut-based Frontier didn’t have an immediate comment.

Frontier has more deeply distressed bonds than any other North American issuer – many of the notes trade for less than half their original value – and third-quarter results didn’t offer much encouragement. Revenue fell 6.1% and a measure of adjusted earnings was down 8.4%, according to its earning statement. Those declines were both larger than expected, according to Flynn.

Weak Quarter

“The third quarter was surprisingly weak,” Flynn said in an interview. “It’s definitely logical to try to bring in as much liquidity as they can, while they can, ahead of any potential addresses to their capital structure.”

Frontier has $333 million of interest due on its unsecured bonds and first-lien debt on March 15, and another $381 million in April, according to data compiled by Bloomberg. Those dates could be the next trigger for a restructuring, Flynn said, but he added that Frontier now has enough cash to keep going until 2022, when $2.7 billion of unsecured bonds mature.

The 8.75% unsecured notes maturing in April 2022 fell 2 cents on the dollar to 45 cents Wednesday. The 10.5% notes due September 2022 were little changed at 46 cents.

The credit line draw is notable because the company is expected to post better free cash flow in the fourth quarter and for the full year, according to Dave Novosel, an analyst at Gimme Credit. He estimates $300 million of free cash flow for the year.

“When you compare that figure to other types of bankruptcy situations over the past year, that’s actually pretty good,” he said.

Frontier is also expecting to complete its sale of assets in Washington, Oregon, Idaho and Montana for $1.35 billion in the second quarter of 2020, which will further boost its cash position, Novosel said. It’s unlikely that the company will file for bankruptcy in the next quarter or two given the liquidity position, he said.

But over the long term, the writing is on the wall for Frontier, given the overall decline of its wireline business and its need to fund growth in the broadband unit, Novosel said. The company provides telecom and Internet service to rural households and businesses.

“I don’t know if this is a good business,” he said.

https://finance.yahoo.com/news/frontier-fuels-speculation-fate-draining-193310711.html

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Post ID: @11UmAv6K

15 replies (most recent on top)

You can look up FTR stock and see the short interest.

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Post ID: @11UmAv6K-flos

I would be curious if anyone or institution has been shorting the stock in coordination with this rocket slide to bankruptcy. Its almost impossible to mismanage a company this badly.....well, unless you are frontier

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Post ID: @11UmAv6K-fuyf

I'll talk to you Allison

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Post ID: @11UmAv6K-awsf

The fix was in ever since Frontier started to jump in the dead end of the pool and buy declining land line business, with declining revenue . Wouldn't you know the CEO is the only one with a golden life preserver

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Post ID: @11UmAv6K-7uys

If Frontier goes bankrupt your pension is covered by the PBGC (pension benefit guarantee corporation). It will not be paid in a lump sum. It will be an annuity. It is guaranteed up to $4100 a month.

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Post ID: @11UmAv6K-6dnt

1) They don’t CARE. Whether or not it LASTS until 2022 remains to be seen. The bottom line is...they KNOW the end date and are going to SIPHON all the coffers. Hell, they’ve been DOING it for a couple YEARS now. I read where ole McCarthy has an AWESOME severance. JS. “I am SURE worried about whatever happens to him.”....said NO ONE EVER.
2) They THREW this fight. It was rigged.
3) It bears REmentioning...THEY.DON’T.CARE.

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Post ID: @11UmAv6K-5nqj

Allison we have plenty of info about this scam they have going on. Do something right with the $500 you just drained out.

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Post ID: @11UmAv6K-2eww

Lawanda how would they know you spoke to a reporter ijs also there’s laws to protect you and they aren’t allowed to give their source another thing the company can do nothing if you speak the truth.... Allison I just may hit you up and speak to you cause unlike some I’m not scared and signed nothing stating I won’t talk to a reporter therefor firing me for doing so if they were to find out is retaliation and I can sue them for that

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Post ID: @11UmAv6K-2nyt

It’s amazing how in three short years this company get to this point. It Almost like this planned to do this. (Wink, wink ) Wish it was illegal to Purposely tank a company the way they did

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Post ID: @11UmAv6K-2wpx

Allison,
My coach told me that we aren’t allowed to talk with reporters. My coach got put on a PIP last week and he is afraid that he is going to lose his job. He also told me that any employee that speaks to a reporter will be immediately terminated. He said Bloomberg is fake news anyways.

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Post ID: @11UmAv6K-1vyj

Hello,

My name is Allison McNeely and I'm a reporter at Bloomberg News. I've been following Frontier (and wrote the story at the top of this post). I'd be interested in speaking with employees. You can reach me at [email protected] I'm also on WhatsApp, Signal and Telegram (please email for contact).

Thank you,
Allison

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Post ID: @11UmAv6K-1ijq

What happens to employees if frontier files bankruptcy ? What happens to our pensions? I’ve heard they are only government insured for 25k

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Post ID: @11UmAv6K-cze

Sell California,Texas, and Florida. Go back to what you know Frontier, the past 3 years have been an eye opener for you, face the truth that you cannot operate these states in a profitable manor.
Top management is oblivious to the fundamentals of field operations and middle management doesn't have the balls to say these new ideas are not working.

Quit letting dispatch run the show, let craft employees rehabilitate the problems in the network, and stop with the micro managing programs that have zero influence on a better customer experience.

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Post ID: @11UmAv6K-zex

That’s true that we are using credit but we need it to invest in our company. We recently set up a partnership with a streaming partner called PlayStation VUE. My coach says we no longer have to sell TV because Frontier has embraced the future. My coach said this will make us more profitable

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Post ID: @11UmAv6K-ngd

Abandon ship while you can! Take a package if you get one!

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Post ID: @11UmAv6K-fyr

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