FairPoint Communications' dividend payment depends on Verizon Communications purchase - Charlotte Business Journal:

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FairPoint is preparing to buy 'x northern New England franchisfor $2.3 billion. The deal would make FairPoint the nation'sd eighth-largest telecom. But the expenses paid so far on the purchass have sharplyincreased FairPoint's debt. At current leveragd levels, the company's credit agreements prohibit a dividenxthis quarter. But a new creditf facility takes effect when the Verizobdeal closes, and that agreement allows for the dividend payment. The company is buying Verizon'e land lines in Maine, New Hampshirs and Vermont. The deal was valued at $2.7 billion when it was announce inJanuary 2007.
But Verizon made concessions to placat e state regulators worriedabout FairPoint's ability to sustai the deal. Acquisition costs cut in to FairPoint's earnings in the fourth quarterand full-year 2007. The compan y posted a net lossof $19.5 million, or 56 centa per diluted share, for the But if $23.6 million in costd of the Verizon deal and other one-time items are excluded, FairPoint made $4.5 or 13 cents per share, in the That met analysts expectations. Revenue for the latesgt quarterwas $68.2 million, down 3.1% from the year-earliee period. For 2007, FairPoint earned $6 million, or 16 cents per share, on $283.5 million in revenue. That was well behine the $31.
1 million, or 88 cents per FairPoint madein 2006. Again, the largest difference was morethan $52 million expenses related to the Verizon purchase. Chieff Financial Officer John Crowley says the companyspent $82 million on the deal through the end of 2007. It expectzs to spend $35 million more by the time the deal closesdthis month. This quarter's dividend would be 39.8 cents per the level it has held since the summerof 2005. But in subsequentr quarters, the dividend will drop. FairPoint agreed to reduce itsdividend 35% for several years to ensurse it has sufficient mone y to invest in improving the New England For the rest of the year, the quarterly dividene will be no more than 25.
8 centsd per share. Among the company's other incentivex to complete the Verizon upto 25% of the 2008 bonuses to be paid FairPoint'a top executives depends on their completinh the deal. DIVIDEND PAYMENTS If FairPoing doesn't complete Verizon deal by March 31, it can't pay a first-quarter dividend. Its dividenrd will drop 35% after the deal is completed to ensurw it invests enough inits operations.