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Frontier Inks Restructuring Support Agreement to Reduce Debt
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Frontier Communications Corporation recently inked a Restructuring Support Agreement (“RSA”) with bondholders to secure adequate funds in order to reduce its huge debt burden and prop up liquidity to fuel long-term growth. The company has also filed petitions for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York.
Per the RSA, Frontier will trim its debt by more than $10 billion. The recapitalization plan further intends to offer the flexibility to sustain operations, while continuing to honor the financial obligations of the trade vendors for all goods and services provided before and after the bankruptcy filing. This, in turn, is likely to facilitate the smooth functioning of customer-oriented operations, without disrupting the services.
In addition, Frontier has secured $460 million worth of debtor-in-possession ("DIP") financing that is likely to augment its liquidity position to more than $1.1 billion, including about $700-million cash in hand. This is likely to offer a safety cushion to the company for implementing its restructuring plan. Moreover, it has sought the court’s approval to expedite the asset sale transactions of its Washington, Oregon, Idaho and Montana operations and assets for $1.3 billion in cash.
Frontier is presently focusing on various cost-control initiatives by bringing about productivity and customer-oriented enhancements, thus improving efficiency in its daily operations. At the same time, the company has been targeting Small and Medium Businesses (SMBs). It has been enhancing its Ethernet capabilities, lately, and eyeing the retention of SMB customers with attractive plans.
For instance, of late, the company has been enhancing its product portfolio with a new cloud-based Unified Communications as a Service (UCaaS) offering, which complements its Ethernet and SD-WAN offerings. While the major thrust remains on increasing the uptake of its services by SMB customers, Frontier is expanding its Fiber-based broadband footprint to cater to the needs of bigger customers as well. We are encouraged by the sustainable broadband subscriber growth supported by strong network expansion and an improved pricing structure.
The stock has lost 84.9% in the past year compared with the industry’s decline of 47.2%.
ORBCOMM delivered a positive earnings surprise of 5.8%, on average, in the trailing four quarters.
T-Mobile has a long-term earnings growth expectation of 17.7%. It surpassed earnings estimates in the trailing four quarters, the average positive surprise being 19.5%.
Iridium delivered a positive earnings surprise of 14.1%, on average, in the trailing four quarters.
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Frontier Inks Restructuring Support Agreement to Reduce Debt
Frontier Communications Corporation recently inked a Restructuring Support Agreement (“RSA”) with bondholders to secure adequate funds in order to reduce its huge debt burden and prop up liquidity to fuel long-term growth. The company has also filed petitions for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York.
Per the RSA, Frontier will trim its debt by more than $10 billion. The recapitalization plan further intends to offer the flexibility to sustain operations, while continuing to honor the financial obligations of the trade vendors for all goods and services provided before and after the bankruptcy filing. This, in turn, is likely to facilitate the smooth functioning of customer-oriented operations, without disrupting the services.
In addition, Frontier has secured $460 million worth of debtor-in-possession ("DIP") financing that is likely to augment its liquidity position to more than $1.1 billion, including about $700-million cash in hand. This is likely to offer a safety cushion to the company for implementing its restructuring plan. Moreover, it has sought the court’s approval to expedite the asset sale transactions of its Washington, Oregon, Idaho and Montana operations and assets for $1.3 billion in cash.
Frontier is presently focusing on various cost-control initiatives by bringing about productivity and customer-oriented enhancements, thus improving efficiency in its daily operations. At the same time, the company has been targeting Small and Medium Businesses (SMBs). It has been enhancing its Ethernet capabilities, lately, and eyeing the retention of SMB customers with attractive plans.
For instance, of late, the company has been enhancing its product portfolio with a new cloud-based Unified Communications as a Service (UCaaS) offering, which complements its Ethernet and SD-WAN offerings. While the major thrust remains on increasing the uptake of its services by SMB customers, Frontier is expanding its Fiber-based broadband footprint to cater to the needs of bigger customers as well. We are encouraged by the sustainable broadband subscriber growth supported by strong network expansion and an improved pricing structure.
The stock has lost 84.9% in the past year compared with the industry’s decline of 47.2%.
Frontier presently has a Zacks Rank #2 (Buy). Other similar-ranked stocks in the broader industry include ORBCOMM Inc. , T-Mobile US, Inc. (TMUS - Free Report) and Iridium Communications Inc (IRDM - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ORBCOMM delivered a positive earnings surprise of 5.8%, on average, in the trailing four quarters.
T-Mobile has a long-term earnings growth expectation of 17.7%. It surpassed earnings estimates in the trailing four quarters, the average positive surprise being 19.5%.
Iridium delivered a positive earnings surprise of 14.1%, on average, in the trailing four quarters.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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