Once-Bankrupt FairPoint Cuts Debt With Asset Sale

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**Editor's Note: Please click here for the biggest M&A in Q3 2012 in the service-provider and BSS/OSS spaces.**

Charlotte, N.C.-based FairPoint Communications, which emerged from bankruptcy nearly two years ago after reducing its debt from $2.8 billion to $1 billion, is selling an asset.

Blackfoot Telecommunications of Missoula, Mt., is spending $30 million for FairPoint's Idaho-based operations.

"FairPoint's operations in Idaho are ideally suited for Blackfoot Telecommunications Group," said Ajay Sabherwal, FairPoint executive vice president and chief financial officer. "We believe that the resulting reduction of debt arising from this transaction enhances shareholder value."

FairPoint's Idaho properties serve more than 5,000 residential and business customers in eastern Idaho, contributing $8 million in revenue, approximately $5 million in EBITDA, with capital expenditures of approximately $1 million.

In recent years, FairPoint has lost significant market share as the result of bankruptcy and certain back-office challenges. In March 2008, the company acquired Verizon's landline operators in northern New England, making FairPoint the eighth largest phone provider in the U.S. But the company faced problems transitioning Verizon’s order flow and billing systems.

The transaction is expected to close in early 2013, subject to state and federal regulatory approvals. Eleven FairPoint employees will join the Blackfoot organization at closing.

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