FairPoint bankruptcy wouldn’t affect services, state officials say

Posted July 01, 2009, at 8:15 p.m.

AUGUSTA, Maine — Representatives of FairPoint Communications and Maine’s Public Advocate’s Office sought to assure customers this week that phone and Internet services would not be affected if the beleaguered company is forced into bankruptcy.

FairPoint officials have said that filing for bankruptcy protection would only happen if other options for restructuring the company’s debt are unsuccessful.

Last week, FairPoint officials notified bondholders and federal regulators that due to financial troubles, the company essentially was seeking to delay interest payments due Oct. 1 on more than $500 million in debts.

If FairPoint fails to secure agreements to delay payments on 95 percent of that debt, the company said it would be forced to consider other restructuring options, including bankruptcy.

But Jeff Nevins, spokesman for FairPoint in Maine, stressed that it has not come to that point.

“We want to make sure people understand that we have not filed for bankruptcy,” Nevins said. “But regardless of what our financial situation is, we will continue to serve our customers. For most customers, they won’t really notice a difference.”

Representatives of Maine’s Public Advocate’s Office agreed. Because FairPoint is a regulated public utility, its customers will continue to receive service regardless of financial problems.

“There is no way the company is going to go out of business,” said Wayne Jortner, a senior counsel at the advocate’s office, which is charged with representing the interests of ratepayers in dealing with utilities. “The company is going to continue to operate.”

FairPoint has been struggling to fix technical and billing problems as well as fulfill service orders ever since the North Carolina company formally took over Verizon’s land lines earlier this year. Those widely publicized problems led many customers to leave FairPoint, exacerbating the company’s financial situation.

Nevins said the situation has improved significantly in recent months. Nearly all of the billing problems have been addressed, he said. And most customers phoning into FairPoint’s call center get a live person within one minute as opposed to the busy signals and seemingly endless waits that many customers encountered a few months back.

“We do have a backlog on orders, but we are making progress on that backlog,” Nevins said.

Jortner and William Black, the state’s deputy public advocate, agreed that complaints about the calling center have improved dramatically. But their office has seen an increase in other complaints after weeks of progress. Most complaints go directly to the Public Utilities Commission, however.

On Wednesday, a new face, David Hauser, took over as chairman and CEO of the Charlotte-based company. Hauser joined FairPoint after more than 35 years with Duke Energy, one of the nation’s largest electricity producers.

Hauser has pledged to address the problems.

“While it is gratifying to be named chairman and CEO of this longstanding organization, I am very aware of the operational and financial concerns surrounding the company,” he said in a statement accompanying last month’s announcement of his selection as chairman and CEO.

“My primary focus will be to address these concerns in quick succession and empower our team to seek and implement solutions.”

In the meantime, Jortner and Black said they hope customers will stick with FairPoint because additional losses will only make the company’s financial matters worse. The two men also hope that FairPoint’s bondholders will agree to some form of debt restructuring, thereby allowing all sides to focus on fixing the service problems rather than spending money on bankruptcy lawyers.

Should the company enter into bankruptcy, the Public Advocate’s Office would seek intervenor status to protect the rates that were negotiated with FairPoint, Jortner and Black said.

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