FairPoint Communications has asked the Vermont Public Service Board to reconsider its rejection of FairPoint’s bankruptcy plan. FairPoint is under US Bankruptcy Court protection as it seeks to restructure most of its nearly $3 billion debt. It filed for Chapter 11 protection in New York last year and hoped to emerge from bankruptcy by the end of this summer. However, the Vermont regulators threw a wrench into the case when it rejected on June 28 the restructuring plan. Regulators in Maine and New Hampshire have approved the plan.
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FairPoint decided last week to ask the Vermont PSB to reconsider its ruling. Because there are several states involved, the Vermont regulators cannot simply issue a separate agreement. FairPoint has suggested that another option it has is to go directly to the US Bankruptcy Court for the southern district of New York, thus circumventing the Vermont PSB. The Vermont regulators rejected the plan in large part because of a six-month delay in FairPoint’s buildout of its broadband network. The Vermont board also was concerned about the financial reports.
FairPoint also announced this week that creditors, who will own the company once it emerges from bankruptcy, want to installa new CEO. Outgoing CEO David Hauser said this is not surprising because creditors typically want their own person running the company. FairPoint has asked the bankruptcy court for permission to appoint Paul Sunu as its new CEO. He would be the third CEO in less than two years for the North Carolina-based telecom.
FairPoint bought Verizon's landline business in Vermont, New Hampshire and Maine in 2008 for $2.3 billion. It cut over from Verizon’s system in February 2009. Between the national economic recession, technical problems and aggressive competition from, especially, cable and mobile companies, the company has lost tens of thousands of customers. It filed for bankruptcy protection in October 2009. Under the plan, creditors would reduce debt from what had become a $2.7 billion obligation to $1 billion in exchange for equity.
In a video interview with Vermont Business Magazine editor Timothy McQuiston, conducted in July, FairPoint’s Vermont President Michael Smith talks about an editorial in VBM in June in reaction to the PSB ruling. Smith also speaks to the larger picture of FairPoint’s bankruptcy, the rejection by the Vermont regulators and FairPoint’s resultant options, its finances, the viability of its future, its competition, its decision not to use wireless broadband and instead focus on a fiber optic network (a decision which Smith said caused the delay in broadband buildout), and the recent grant by the federal government to Sovernet to spend millions of dollars in Vermont.
Smith’s position is that for a rural state such as Vermont, there must be a unified effort by all stakeholders: private competitors, regulated and unregulated; government; and regulators to bring high speed Internet at the highest level to all Vermonters and to the last mile. Spending millions of dollars on more ‘middle-mile’ lines is a redundancy that does not make the best use of resources.
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