They are paying 7.625 IF they get this off at 100%. Last time the effective rate was under 6.5%. Clearly not a good trend. They keep pushing out judgement day, slipping targets on reducing leverage and all of their guidances and projections exclude any longer-term solution to the pension deficit and assume they continue to receive their "dole" from the government (FCC)...wonder how the sequester will impact that??
Not sure if there is any economy to be created by merging this company with any other...I would assume they purchase at lowest prices already...not sure if they can consolidate overheads and any geographical overlaps for supervision...but looks to me like the salvation for the future would be to find someone with less leverage who can then increase FTR's cash flow through "synergies" and pull this out.
Everytime one turns around they are getting in deeper and deeper. They may push this out a few years, but if they don't get revenue up they have no slack if they get hit with a "problem"...so the dividend is not as secure as many think.
Many like to compare FTR with VZ. Well....I scanned their financials and VZ doesn't look so hot either. Their net income has dropped dramatically YOY. FIOS is an admitted disaster. VZ has over $100 billion in goodwill and other intangibles on their books AND another $100 billion in LT debt.
"Many like to compare FTR with VZ. Well....I scanned their financials and VZ doesn't look so hot either. Their net income has dropped dramatically YOY. FIOS is an admitted disaster. VZ has over $100 billion in goodwill and other intangibles on their books AND another $100 billion in LT debt"
As a comment on the above, I'll add that the consensus of the 25 or so analysts who follow VZ estimate on average revenue up 4.2% for VZ this year and 2013 Operating EPS of $2.76 up from $2.31 for 2012 or about up 19.5%.
That's a lot of new cash flow at a time when VZ needs it the most to possibly buy out VOD's 45% of VZW. This of course would be a no-brain-er acquisition at the right price because it's just a paper transaction as VZW is managed by VZ. Sage you say, "Many like to compare FTR with VZ. Well....I scanned their financials and VZ doesn't look so hot either" Right old man, there is no comparison -- there ain't no 45% of FTRW to acquire, now is there?
FTR has so many shares short there is no telling what the stock will do -- FTR is in the top 10 of shorted stocks in the S&P while VZ is one of the fastest growing stocks in the DOW. FTR is a NASDAQ dog with a junk credit rating.
There is no comparison between VZ and FTR. It's like apples and oranges . The scope, size and profitability of the two companies, are nowhere close to each other. FTR has no FTTP (excluding the 3 areas of FiOS they bought from VZ - none of their own) or wireless, or any substancial Enterprise customers. VZ has NYC and FTR has Ft. Wayne... Big difference.
Source was a filing this AM with the term sheet. (FWP) and they are goosing it to $750mm. I will try and reproduce below, but Yahoo usually does't allow long posts:
Frontier Communications Corporation
Pricing Term Sheet
Issuer: Frontier Communications Corporation
Securities: Senior Notes due 2024
Principal Amount: $750,000,000
Net Proceeds to Frontier (before expenses): $736,875,000
Maturity: April 15, 2024
Price: 100.00% of aggregate principal amount
Yield to maturity: 7.625%
Spread to Benchmark Treasury: 565 basis points
Benchmark Treasury: UST 7.50% due November 15, 2024
Benchmark Treasury Yield: 1.980%
Interest Payment Dates: April 15 and October 15, commencing October 15, 2013
Make-whole call: At any time at a discount rate of Adjusted Treasury Rate plus 50 basis points
Change of Control: 101% plus accrued and unpaid interest, if any
Trade Date: March 27, 2013
Settlement(1): T+9; April 10, 2013
CUSIP/ISIN: 35906A AN8 / US35906AAN81
Ratings(2): Ba2/BB- (existing)
Underwriting discount: 1.750%
Min. Allocation: $2,000
(1) We expect that delivery of the notes will be made against payment therefor on or about April 10, 2013, which is the ninth business day following the date hereof (such settlement cycle being referred to as T+9). Under Rule 15c6-1 of the Securities Exchange Act of 1934, as amended, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly purchasers who wish to trade the notes on the date of pricing or the next succeeding five business days will be required, by virtue of the fact that the notes initially will settle in T+9, to specify an alternate settlement cycle at the time of any such trade to prevent failed settlement. Purchasers of the notes who wish to trade the notes on the date of pricing or the next succeeding five business days should c