FairPoint Communications, Inc. (NASDAQ:FRP) Files An 8-K Entry into a Material Definitive Agreement

FairPoint Communications, Inc. (NASDAQ:FRP) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01

Entry into a Material Definitive Agreement
On December 3, 2016, FairPoint Communications, Inc., a Delaware
corporation (the Company), entered into an Agreement and Plan of
Merger (the Merger Agreement), with Consolidated Communications
Holdings, Inc., a Delaware corporation (Parent) and Falcon Merger
Sub, Inc., a newly formed Delaware corporation and a wholly-owned
subsidiary of Parent (Merger Sub). The Merger Agreement provides
for, among other things, a business combination whereby Merger
Sub will merge with and into the Company, with the Company as the
surviving entity (the Merger). As a result of the Merger, the
separate corporate existence of Merger Sub will cease, and the
Company will continue as the surviving corporation and a wholly
owned subsidiary of Parent.
At the effective time of the Merger, each share of common stock,
par value $0.01 per share, of the Company (Company Common Stock)
issued and outstanding immediately prior to the effective time of
the Merger (other than (i) shares held in treasury or owned
directly by the Company, any Subsidiary of the Company, Merger
Sub or Parent (other than shares in trust accounts, managed
accounts and the like or shares held in satisfaction of a debt
previously contracted) and (ii) shares held by stockholders who
have properly made and not withdrawn a demand for appraisal
rights under Delaware law) will be converted into and become the
right to receive 0.7300 shares of common stock, par value $0.01
per share, of Parent (the Parent Stock) and cash in lieu of
fractional shares, less any applicable taxes required to be
withheld, all as set forth in the Merger Agreement.
The Merger is subject to various customary closing conditions,
including, but not limited to, (i) approval by the Companys
stockholders and Parents stockholders, (ii) the expiration or
termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
(iii) federal and state regulatory approvals, (iv) the absence of
any order, injunction, statute, rule, regulation or decree
prohibiting, precluding, restraining, enjoining or making illegal
the consummation of the Merger, (v) the accuracy of the
representations and warranties of each party, (vi) performance,
in all material respects, of all obligations and compliance with,
in all material respects, agreements and covenants to be
performed or complied with by each party, (vii) declaration of
effectiveness of the Registration Statement on Form S-4 to be
filed by Parent, (viii) the Company holding a minimum cash amount
as of the effective time of the merger, and (ix) the approval of
the listing of additional shares of Parent Stock to be issued to
the Companys stockholders.
The Company, Parent and Merger Sub have made customary
representations, warranties and covenants in the Merger
Agreement, including the Company agreeing not to solicit
alternative transactions or, subject to certain exceptions, to
enter into discussions concerning, or provide confidential
information in connection with, an alternative transaction except
as provided by the Merger Agreement. The Company has agreed to
customary covenants regarding the operation of the business of
the Company and its subsidiaries prior to the closing, including
to convene and hold a meeting of its stockholders to consider and
vote upon the Merger and, subject to certain customary
exceptions, to recommend that its stockholders approve and adopt
the Merger Agreement. The Companys agreement not to solicit or
engage in discussions regarding alternative transactions is
subject to a customary fiduciary out provision that allows the
Company, under certain circumstances and in compliance with
certain obligations, to provide non-public information and engage
in discussions and negotiations with respect to an unsolicited
alternative acquisition proposal that would reasonably be
expected to lead to a Superior Proposal (as defined in the Merger
Agreement).
The Merger Agreement contains certain termination rights for both
the Company and Parent, and further provides that, upon
termination of the Merger Agreement under certain circumstances,
the Company may be obligated to pay Parent a termination fee of
$18.9 million and, upon termination of the Merger Agreement under
certain other circumstances, Parent may be obligated to pay the
Company a termination fee of $18.9 million.
As of the effective time, each option to purchase shares of the
Company Common Stock or other right to purchase the Company
Common Stock under any Company stock plan (each, a Company
Option), to the extent outstanding and unexercised immediately
prior thereto, shall become fully vested and shall, subject to
certain conditions set forth in the Merger Agreement, without any
action on the part of any holder thereof, be automatically
canceled in exchange for the right to receive, as soon as
reasonably practicable following the effective time, that number
of shares of Parent Stock as is equal to the option consideration
(as defined in the Merger Agreement).
As of the effective time, each performance award granted under
any Company stock plan (each, a Performance Award), to the extent
outstanding immediately prior thereto, shall become fully vested
(at the 50% level) and shall, without any action on the part of
any holder thereof, be automatically canceled in exchange for the
right to receive, as soon as reasonably practicable following the
effective time, the number of shares of Parent Stock equal to the
performance award consideration (as defined in the Merger
Agreement).
As of the effective time, each restricted share award granted
under any Company stock plan, to the extent outstanding and
subject to vesting or forfeiture conditions (whether time-based
or performance-based), shall become fully vested or released from
such forfeiture conditions as of the effective time and shall be
treated as a share of Company Common Stock for all purposes of
the Merger Agreement.
Parent has secured committed debt financing in conjunction with
the Merger that, in addition to cash on hand or other sources of
liquidity, will be used to refinance Company debt and pay fees
and expenses associated with the Merger.
The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Merger Agreement, a copy of
which will be submitted in a future filing.
Item 7.01
Regulation FD Disclosure.
On December 5, 2016, Parent and the Company issued a joint press
release announcing that they had entered into the Merger
Agreement. A copy of the press release is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
In addition, on December 5, 2016, Parent intends to provide
supplemental information regarding the proposed transaction to
investors and analysts, a copy of the written materials for which
is attached hereto as Exhibit 99.2 and incorporated herein by
reference.
Safe Harbor
The Securities and Exchange Commission (SEC) encourages companies
to disclose forward-looking information so that investors can
better understand a companys future prospects and make informed
investment decisions. Certain statements in this filing are
forward-looking statements and are made to the safe harbor
provisions of the Securities Litigation Reform Act of 1995. These
forward-looking statements reflect, among other things, current
expectations, plans, strategies, and anticipated financial
results of Parent and the Company, both separately and as a
combined entity. There are a number of risks, uncertainties, and
conditions that may cause the actual results of Parent and the
Company, both separately and as a combined entity, to differ
materially from those expressed or implied by these
forward-looking statements. These risks and uncertainties include
the timing and ability to complete the proposed acquisition of
the Company by Parent, the expected benefits of the integration
of the two companies and successful integration of the Companys
operations with those of Parent and realization of the synergies
from the integration, as well as a number of factors related to
the respective businesses of Parent and the Company, including
economic and financial market conditions generally and economic
conditions in Parents and the Companys service areas; various
risks to stockholders of not receiving dividends and risks to
Parents ability to pursue growth opportunities if Parent
continues to pay dividends according to the current dividend
policy; various risks to the price and volatility of Parents
common stock; changes in the valuation of pension plan assets;
the substantial amount of debt and Parents ability to repay or
refinance it or incur additional debt in the future; Parents need
for a significant amount of cash to service and repay the debt
and to pay dividends on the common stock; restrictions contained
in the debt agreements that limit the discretion of management in
operating the business; legal or regulatory proceedings or other
matters that impact the timing or ability to complete the
acquisition as contemplated, regulatory changes, including
changes to subsidies, rapid development and introduction of new
technologies and intense competition in the telecommunications
industry; risks associated with Parents possible pursuit of
acquisitions; system failures; losses of large customers or
government contracts; risks associated with the rights-of-way for
the network; disruptions in the relationship with third party
vendors; losses of key management personnel and the inability to
attract and retain highly qualified management and personnel in
the future; changes in the extensive governmental legislation and
regulations governing telecommunications providers and the
provision of telecommunications services; telecommunications
carriers disputing and/or avoiding their obligations to pay
network access charges for use of Parents and the Companys
network; high costs of regulatory compliance; the competitive
impact of legislation and regulatory changes in the
telecommunications industry; liability and compliance costs
regarding environmental regulations; the possibility of
disruption from the integration of the two companies making it
more difficult to maintain business and operational
relationships; the possibility that the acquisition is not
consummated, including, but not limited to, due to the failure to
satisfy the closing conditions; the possibility that the merger
may be more expensive to complete than anticipated, including as
a result of unexpected factors or events; and diversion of
managements attention from ongoing business operations and
opportunities. A detailed discussion of risks and uncertainties
that could cause actual results and events to differ materially
from such forward-looking statements are discussed in more detail
in Parents and the Companys respective filings with the SEC,
including the Annual Report on Form 10-K of Parent for the year
ended December 31, 2015, which was filed with the SEC on February
29, 2016, under the heading Item 1ARisk Factors, and the Annual
Report on Form 10-K of the Company for the year ended December
31, 2015, which was filed with the SEC on March 2, 2016, under
the heading Item 1ARisk Factors, and in subsequent reports on
Forms 10-Q and 8-K and other filings made with the SEC by each of
Parent and the
Company. Many of these circumstances are beyond the ability of
Parent and the Company to control or predict. Moreover,
forward-looking statements necessarily involve assumptions on the
part of Parent and the Company. These forward-looking statements
generally are identified by the words believe, expect,
anticipate, estimate, project, intend, plan, should, may, will,
would, will be, will continue or similar expressions. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements of Parent and the Company, and their
respective subsidiaries, both separately and as a combined entity
to be different from those expressed or implied in the
forward-looking statements. All forward-looking statements
attributable to us or persons acting on the respective behalf of
Parent or the Company are expressly qualified in their entirety
by the cautionary statements that appear throughout this filing.
Furthermore, forward-looking statements speak only as of the date
they are made. Except as required under the federal securities
laws or the rules and regulations of the SEC, each of Parent and
the Company disclaim any intention or obligation to update or
revise publicly any forward-looking statements. You should not
place undue reliance on forward-looking statements.
Important Merger Information and Additional Information
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation
of any vote or approval. In connection with the proposed
transaction, Parent and the Company will file relevant materials
with the SEC. Parent will file a Registration Statement on Form
S-4 that includes a joint proxy statement of Parent and the
Company and which also constitutes a prospectus of Parent. Parent
and the Company will mail the final joint proxy
statement/prospectus to their respective stockholders. Investors
are urged to read the joint proxy statement/prospectus regarding
the proposed transaction when it becomes available, because it
will contain important information. The joint proxy
statement/prospectus and other relevant documents that have been
or will be filed by Parent and the Company with the SEC are or
will be available free of charge at the SECs website,
www.sec.gov, or by directing a request when such a filing is made
to Consolidated Communications Holdings, Inc., 121 South 17th
Street, Mattoon, IL 61938, Attention: Investor Relations or to
FairPoint Communications, Inc., 521 East Morehead Street, Suite
500, Charlotte, North Carolina 28202, Attention: Investor
Relations.
Parent, the Company and certain of their respective directors,
executive officers and other members of management and employees
may be considered participants in the solicitation of proxies in
connection with the proposed transaction. Information about the
directors and executive officers of Parent is set forth in its
definitive proxy statement, which was filed with the SEC on March
28, 2016. Information about the directors and executive officers
of the Company is set forth in its definitive proxy statement,
which was filed with the SEC on March 25, 2016.>>These
documents can be obtained free of charge from the sources listed
above. Investors may obtain additional information regarding the
interests of such participants by reading the joint proxy
statement/prospectus Parent and the Company will file with the
SEC when it becomes available.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits.
The Exhibit Index appearing immediately after the page to this
Current Report on Form 8-K is incorporated herein by reference.


About FairPoint Communications, Inc. (NASDAQ:FRP)

FairPoint Communications, Inc. is a provider of communications services to business, wholesale and residential customers within its service territories. The Company operates through providing data, voice and communications services to business, wholesale and residential customers segment. The Company provides services, such as Data and Internet Services, which include optical, Ethernet, IP services, Ethernet virtual circuit technology for cellular backhaul and private line special access services; Voice Services, which include Local Calling Services, Long Distance Services and 9-1-1 Services; Access, which include Network Transport Services, Network Switched Access Service, Interstate Access Charges and Intrastate Access Charges, and Other services, which include video services, including cable television and video-over- digital subscriber line (DSL), and directory services. It provides cellular transport, also known as backhaul, through over 1,900 mobile Ethernet backhaul connections.

FairPoint Communications, Inc. (NASDAQ:FRP) Recent Trading Information

FairPoint Communications, Inc. (NASDAQ:FRP) closed its last trading session up +0.25 at 17.00 with 78,597 shares trading hands.

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