NEW YORK (Reuters) – Telecommunications provider FairPoint Communications Inc on Monday filed a delayed plan of reorganization that calls for distributing millions of new shares to claim holders.
The company said in court filings that $2.1 billion in allowed pre-petition credit agreement claims could expect a recovery of about 87.9 cents on the dollar in cash and new shares, and $635.3 million of unsecured claims could expect to recover 17 cents on the dollar in the form of shares of the reorganized company.
Subject to certain conditions, some 47 million new common shares will be distributed to holders of Class 4 pre-petition credit agreement claims, and 4 million shares will be distributed to Class 7 unsecured claim holders.
Current shareholders would be wiped out.
The plan is subject to bankruptcy court approval.
The rural telecom services provider filed for Chapter 11 bankruptcy on Oct. 29, citing the need to cut debt after a costly acquisition and the loss of wireline voice customers due to competition from other communications providers.
In a court filing, the company also said it plans to invest more than $100 million over the next two years to build out its next-generation Internet protocol-based network.
David Hauser will remain chairman and chief executive officer, the company said.
The case is In re: FairPoint Communications Inc, U.S. Bankruptcy Court, Southern District of New York (Manhattan) No: 09-16335. (Reporting by Chelsea Emery; additional reporting by Santosh Nadgir in Bangalore and Jon Stempel in New York; editing by John Wallace)