Frontier Skips Bond Payment, Bringing Company Closer to Default

(Bloomberg) -- Frontier Communications Corp. will skip interest bills due March 16, putting the debt-laden phone and broadband network on course for a default and a potential bankruptcy.

The omission affects some of it senior unsecured notes, Frontier said in a statement. More than $320 million was scheduled to be paid, according to Bloomberg data.

“We remain actively engaged in constructive discussions with our bondholders as the company continues to evaluate its capital structure with an eye to reducing debt and interest expense,” according to the statement.

Management led by Bernie Han is entitled to a 60 days to make good on the missed payments. Frontier has been in talks about seeking Chapter 11 court protection and handing control to its creditors, Bloomberg previously reported.

If that happens, the bankruptcy would rank as one of the biggest telecom reorganizations since Worldcom Inc. in 2002. All told, Frontier has about $17.5 billion in debt outstanding, and it currently ranks as the biggest North American issuer of distressed debt, according to Bloomberg Intelligence.

A representative for Norwalk, Connecticut-based Frontier didn’t immediately respond to a request for comment.

Frontier has spent months in talks with advisers and creditors about ways to ease its debt load, which has become a burden as customers move away from using land lines. Its network relies heavily on copper and fiber-optic cabling to provide service.

The company has customers in 29 states, but service probably won’t be interrupted if Frontier files for bankruptcy. A Chapter 11 filing allows a company to keep operating while it works out plans for a turnaround and paying its creditors.

To contact the reporter on this story: Allison McNeely in New York at amcneely@bloomberg.net

To contact the editor responsible for this story: Rick Green at rgreen18@bloomberg.net

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