Frontier Communications (OTC:FTRCQ) Parent, Inc. (NASDAQ:FYBR), currently trading above its InvestingPro Fair Value despite a strong 54% return over the past year, has entered into a significant amendment to its senior secured term loan credit facility, resulting in reduced interest rates, as detailed in a recent filing with the Securities and Exchange Commission.
The telecommunications company, based in Dallas, Texas, achieved a lower margin over adjusted Term SOFR from 3.50% to 2.50% and over the alternative base rate from 2.50% to 1.50%.
This amendment, effective as of Monday, January 14, 2025, reflects Frontier's ongoing financial management efforts. The newly negotiated terms are expected to alleviate some of the financial pressure on the company by lowering the cost of its existing debt, which stands at $11.6 billion. According to InvestingPro data, the company's current ratio of 0.77 indicates that short-term obligations exceed liquid assets, making debt management crucial.
The amendment, known as the "2025 Term Loan Amendment," was made with certain lenders and is part of the company's strategy to optimize its capital structure. Frontier Communications Holdings, LLC, a subsidiary of Frontier Communications Parent, Inc., is the borrower under this amended credit agreement.
In other recent news, Frontier Communications has expedited the vesting and payment of certain executive compensations in anticipation of its upcoming merger with Verizon Communications (NYSE:VZ). This strategic move is aimed at preserving tax deductions and reducing potential excise taxes for executives. Frontier's CEO, Mr. Jeffery, will receive $2.6 million and 326,374 shares of company stock.
In other developments, Frontier's shareholders have overwhelmingly approved the merger agreement with Verizon, marking a significant step towards becoming a wholly owned subsidiary of Verizon. Additionally, Frontier reported a 2% revenue increase in Q2 2024, reaching $1.48 billion, alongside a 5% growth in EBITDA.
However, the company faced a downgrade from Raymond (NS:RYMD) James due to concerns about the shareholder vote. Frontier was also awarded seven ConneCTed Communities grants and secured over $23 million in grants to expand high-speed fiber broadband service in various counties.
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