There is a trust preferred issue backed by Frontiers 7.05% notes that yields 8.375%. The company can call the notes at any time but I doubt they will. More information available at QUANTOMONLINE. The symbol is PIY.
They have plenty of liquidity, bank lines and future cash flows so that their current dividend appears to be safe for at least the next 3-4 years. In fact the Bernanke "put" is almost reversing risk parameters by allowing many sub-prime companies to re-fi debt, stretch out maturities and enhance shareholder returns while putting long-term debt holders at (perhaps) more risk than they would ordinarily take on in their pursuit for yield.
"They have plenty of liquidity, bank lines and future cash flows so that their current dividend appears to be safe for at least the next 3-4 years"
I won't dispute that statement. However, the fact that the current dividend can be paid for the next 4 years is not the criteria that will be used to determine if the current dividend should be paid.
The fact is that since 12/31/10 FTR's overall leverage has gone up by over $900 mil -- you can see that by comparing the Total liabilities and Total Assets balances between 12/10 and 9/12 -- it's not an estimate it's a fact. And that is running in reverse -- while FTR's stated goal is to reduce leverage and improve its debt ratings.
You cannot assume that the dividend is safe unless FTR's financial condition starts to improve because it would be reckless to let FTR pay out cash and get to the point where rating agencies are skeptical that all the future interest payments can be made and debt retired at 100 cents on the dollar -- FTR has a negative outlook from S&P as of early 2012 and reaffirmed negative by S&P on 2/18/12 the day after the dividend was cut. The extra leverage has only made FTR's financial condition worse and the next step for S&P would be to put FTR on negative watch. In this past Q3 FTR took up long term debt by $273 mil to prepare to pay down $500 mil of long term debt maturities due in January 2013. That is a big reason why the stock is trading at $4.19, yielding 9.55% with more than 200k shares short. You say," They have plenty of liquidity" but that is a "let's all feel good" generalization.
If FTR goes on negative watch the bond trustees who administer FTR's bond indentures can demand that the dividend be cut and if necessary sue FTR and ask a NY court to issue an order for FTR to lower it -- but I doubt that it would get that far before the FTR BOD lowers it.
You keep posting the same thing over & over. But they can't keep driving down a tunnel with the oncoming train light getting bigger & bigger until it is too late. That is the reason why the dividend was cut last February. A PV analysis is effected most by the numbers in the first few years and FTR has seen its cash flows follow line runoff and revenues down since 2008. The runoff of cash rich, seasoned revenue in Q's 1 & 2 of 2011 was startling. It's all about revenue and cash flow performance in this Q4 and 1H in 2013 -- it's not about how much more FTR can draw on its bank lines because they are not going to draw on the bank line to fund a dividend -- they no doubt can't even if they wanted to. FTR's bank line has an agreement with plenty of restrictions to make sure the banks get repaid.
The instrument is a Trups -- it is not the same as buying FTR bonds directly -- the Trups are way less senior than FTR's bonds because they are subordinate to all of FTR's other bonds & notes -- all $8.2 bil -- apples & oranges.