Frontier Begins $2.8 Billion Junk-Bond Sale to Exit Bankruptcy

(Bloomberg) -- Frontier Communications Corp. is looking to sell $2.8 billion of junk bonds to help finance its emergence from bankruptcy, its second such sale in two months.

The telecommunications company is sounding out investors for a new $1.8 billion first-lien bond at a yield of around 5.25%, according to people familiar with the matter who asked not to be identified because the discussions are private.

The company is also marketing $1 billion of second-lien notes, which have a more junior claim on its assets, at a yield between 7% and 7.25%, the people said.

The new bonds, which are being offered in conjunction with an increase to an existing term loan, will help Frontier repay debt maturing in 2024 and 2026, according to a statement.

Frontier filed for bankruptcy in April after months of negotiations with creditors over how to best restructure its $17 billion of debt. It was the biggest telecom filing since Worldcom Inc. in 2002, reflecting years of decline in its business providing internet, TV and phone service in 29 states.

The company’s restructuring plan to cut more than $10 billion of debt was approved by a bankruptcy court in August, and it aims to exit Chapter 11 by the first quarter of 2021.

The company sold $1.65 billion of debt in early October as part of its plan to emerge from bankruptcy.

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