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Frontier Communications Corp (NASDAQ:FTR) Updates On Fitch Rating On Its $6.6 Billion Note Offering

Fitch Ratings has given a ‘BB’ rating to Frontier Communications Corp (NASDAQ:FTR) $6.6 billion proposal of senior unsecured notes. These notes comprises three tranches: the first is of $1 billion of 8.875% notes due 2020, the next is $2 billion of 10.5% notes due 2022 and last one is of amount $3.6 billion of 11% notes due 2025. The ratings of the offering are on ‘Watch Negative’. Frontier’s Issuer Default Rating is ‘BB’ and it has Rating Watch Negative.

The indication

The Negative Watch is due to Frontier’s plans to purchase certain wire line businesses in Florida, California and Texas from Verizon Communications Inc. (NYSE:VZ) for nearly $10.54 billion, including assumed debt amounting to $600 million. The deal is expected to complete at the end of March 2016, once all mandatory regulatory approvals are received.


The current offering offers the remaining financing required to complete the deal, after accounting previous equity financing and debt. Prior debt financing comprises of a previous deal for a $1.5 billion secured draw term loan. The funds from an equity proposal were raised in the month of June and comprise of common stock and essential convertible preferred stock, combined worth of $2.75 billion.

The future ahead

Upon the illustration of the senior secured term loan, Frontier Communications Corp (NASDAQ:FTR)’ existing unsecured term loans and unsecured revolving credit facility will become ratably and equally secured with the deferred draw term loan. Also, included with other secured debt, the guarantees will introduce roughly secured debt of $2.3 billion into the capital structure, excluding probable drawings on the existing undrawn revolving credit facility.

In assessing the deal, Fitch will consider the financing of the deal, an assessment of prospective synergies, and the result of the regulatory review process. Fitch expects resolving the Watch Negative around the time of the expected completion of the Verizon deal in early 2016.

Published by Christine Lawrence

Christine Lawrence is a financial analyst. She loves analyzing socioeconomic trends in the background of financial moves. She has overall seven years of experience in Auditing, Finance and Writing.

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