Oct. 26, 2009 (PR Newswire) --

CHARLOTTE, N.C., Oct. 26 /PRNewswire-FirstCall/ -- FairPoint Communications, Inc. (NYSE: FRP) (the "Company"), a leading provider of a full range of communications services, today announced it has reached agreement on a comprehensive financial restructuring plan (the "Restructuring Plan") with lenders (the "Supporting Lenders") holding more than 50 percent of the outstanding debt under its secured credit facility. The Restructuring Plan is expected to reduce the Company's debt by $1.7 billion thereby providing a long-term solution for the Company's balance sheet.

To facilitate the implementation of the Restructuring Plan, the Company also announced that it and all of its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "Court"). The Restructuring Plan must be approved by the Court and the Company intends to promptly file a plan of reorganization reflecting the Restructuring Plan with the Court. The Company and its subsidiaries expect to continue to operate their business in the ordinary course throughout the Chapter 11 process under the jurisdiction of the Court while it seeks confirmation of the Restructuring Plan.

"The day-to-day operations of our business will not be impacted by today's actions," said David Hauser, Chairman and CEO of FairPoint. "We want to assure our customers, employees and vendors that we remain committed to continuing to provide reliable, uninterrupted service to all of our customers. Today's actions represent a critical and positive step in our efforts to reduce our indebtedness, strengthen our financial condition and position FairPoint to compete more effectively in a dynamic marketplace," concluded Hauser.

In connection with the Restructuring Plan, the Company has received commitments from certain of the Supporting Lenders for a $75 million debtor-in-possession revolving credit facility (the "DIP Facility") to ensure sufficient liquidity during the Chapter 11 process. The Company currently has approximately $46 million of cash on hand and expects to continue to generate positive operating cash flow. In total, including the DIP Facility, the Company will have available liquidity of approximately $121 million. In addition, under the terms of the Restructuring Plan, the Company does not expect to pay interest or principal on its prepetition debt while in Chapter 11.

Upon emergence from Chapter 11, subject to certain conditions, the DIP Facility will convert into a $75.0 million five-year revolving credit facility.