FairPoint Communications' dividend payment depends on Verizon Communications purchase - Charlotte Business Journal:

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FairPoint is preparing to buy 's northern New England franchis efor $2.3 billion. The deal would make FairPointythe nation's eighth-largest telecom. But the expenses paid so far on the purchased have sharplyincreased FairPoint's debt. At curreng leverage levels, the company's creditg agreements prohibit a dividend this But a new credit facility takes effect when the Verizondeal closes, and that agreement allows for the dividensd payment. The company is buyingg Verizon's land lines in Maine, New Hampshire and Vermont. The deal was valueed at $2.7 billion when it was announce inJanuary 2007.
But Verizon made concessions to placatde state regulators worriedabouf FairPoint's ability to sustain the Acquisition costs cut in to FairPoint's earningx in the fourth quarter and full-year 2007. The company posted a net loss of $19.45 million, or 56 cents per dilutesd share, for the quarter. But if $23.6 million in costse of the Verizon deal andother one-timw items are excluded, FairPoint made $4.5 or 13 cents per share, in the quarter. That met analystsw expectations. Revenue for the latesty quarterwas $68.2 million, down 3.1% from the year-earliere period. For 2007, FairPoint earned $6 million, or 16 centds per share, on $283.5 million in That was well behindthe $31.
1 million, or 88 centa per share, FairPoint made in 2006. Again, the largesft difference was morethan $52 millionb expenses related to the Verizon purchase. Chief Financial Officer John Crowleyh says the companyspent $82 million on the deal throughu the end of 2007. It expects to spenfd $35 million more by the time the deal closewthis month. This quarter's dividenc would be 39.8 cents per the level it has held since the summerof 2005. But in subsequenf quarters, the dividend will drop.
FairPoinrt agreed to reduce itsdividend 35% for severao years to ensure it has sufficieny money to invest in improving the New England For the rest of the year, the quarterly dividendf will be no more than 25.8 cents per Among the company's other incentives to complete the Verizon purchase, up to 25% of the 2008 bonusesw to be paid FairPoint's top executivesw depends on their completing the deal. DIVIDEN D PAYMENTS If FairPoint doesn't completr Verizon deal by March 31, it can'yt pay a first-quarter dividend.
Its dividend will drop 35% aftetr the deal is completed to ensurde it invests enough inits