PORTLAND, Maine — FairPoint Communications’ new owner has agreed to invest $52.2 million in its networks and facilities in Maine if regulators approve a merger between the company that serves northern New England and its potential new owner, Illinois-based Consolidated Communications.
The stipulation leaves open questions of how Consolidated plans to find $55 million in annual savings through “synergies” but lays out a three-year investment plan sought by the Office of the Public Advocate and unions.
“We’ve been cautiously optimistic that this would be a good thing,” Peter McLaughlin, business manager of the local International Brotherhood of Electrical Workers union representing FairPoint workers in Maine, said.
McLaughlin said that nothing during the merger review changed that cautious optimism, though he thinks the buyer still has not taken a deep dive into the company’s networks and operations. He said the unions wanted to participate in the case, in part, to make sure the buyers and regulators “knew about the network and what shape it was in.”
The plan calls for $17.4 million of annual investments in 2018, 2019 and 2020, primarily in building out FairPoint’s broadband networks and upgrading network speeds. The company would spend $1 million of that money each year on improvements to areas where its network has higher than average problems.
The three-year investment plan comes in a little higher than past years, McLaughlin said, and will help keep the company’s network reliable.
The stipulation filed Tuesday with the Maine Public Utilities Commission lays out other terms of months-long negotiations between labor unions, FairPoint and its buyer, customer representatives and other telecommunications companies.
It also would allow Consolidated to borrow money against FairPoint’s Maine property in order to refinance its debt at more favorable interest rates.
It also would require the company not to lay off any employees working under its five-year contract to manage the state’s emergency 911 system, except in cases of unsatisfactory performance or “conduct contrary to company policy or law.”
The stipulation also would require FairPoint to abide by its existing agreements with other regulated telephone carriers and its interconnection deals with unregulated telecommunications companies for at least two years after the merger closes.
FairPoint’s network serves as the backbone for many other telecommunications providers and services in the state.
If regulators in New Hampshire or Vermont issue a longer requirement for maintaining agreements with other providers, the Maine stipulation would follow suit, adopting the longest of those periods.
“We are pleased with the progress in the regulatory process,” FairPoint spokeswoman Angelynne Beaudry wrote in an email.
The stipulation calls for the unions and the public advocate to meet later
It leaves review of the company’s plan to find savings from “synergies” to a future meeting with the unions and public advocate, which it requires to happen no later than three months after the deal closes.
FairPoint CEO Paul Sunu said earlier this month that the company’s still on track to close the deal by the middle of the year. The company posted a $23.9 million loss for the first quarter of 2017 after it hit a milestone in 2016, reporting the first full profitable year since its bankruptcy restructuring completed in 2011.
The stipulation terms pave the way for the Maine Public Utilities Commission to consider blessing Consolidated’s $1.5 billion bid for the North Carolina-based FairPoint. The commission is scheduled to consider the stipulation during its May 31 meeting, beginning at 10 a.m.
See the full stipulation below.