Long-Term Debt

9 Months Ended

Sep. 30, 2022

Long-Term Debt [Abstract]

Long-Term Debt

(8) Long-Term Debt:

Chapter 11 Restructuring

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all then-outstanding obligations under Old Frontier’s debt agreements and notes as follows:

the amended and restated credit agreement, dated as of February 27, 2017 (as amended, the JPM Credit Agreement),

the 8.000% first lien secured notes due April 1, 2027 (the Original First Lien Notes),

the 8.500% second lien secured notes due April 1, 2026 (the Original Second Lien Notes), and

the unsecured notes and debentures and the secured and unsecured debentures of the Company’s subsidiaries.

As of the Effective Date, amounts that were outstanding under the JPM Credit Agreement, the Original First Lien Notes, and the Original Second Lien Notes were repaid in full.

On the Effective Date, pursuant to the terms of the Plan, all of the obligations under Old Frontier’s unsecured senior note indentures were cancelled, and in connection with emergence, Frontier issued 244,401,000 shares of common stock that were transferred to holders of the allowed senior notes claims (as defined under the Plan).

Interest expense for the one and four months ended April 30, 2021 recorded on our Predecessor statements of income was lower than contractual interest of $112 million and $450 million, respectively, because we ceased accruing interest on the Petition Date in accordance with the terms of the Plan and ASC Topic 852.

The activity in our long-term debt is summarized as follows:

			For the nine months ended September 30, 2022
			Principal
	January 1,		Payments		New		September 30,
($ in millions)	2022		and Retirements		Borrowings		2022
Secured debt issued by Frontier	$	6,927	$	(11)	$	1,200	$	8,116
Secured debt issued by subsidiaries		100		-		-		100
Unsecured debt issued by subsidiaries		750		-		-		750
Principal outstanding	$	7,777	$	(11)	$	1,200	$	8,966
Less: Debt Issuance Costs		(13)						(29)
Less: Current Portion		(15)						(15)
Plus: Unamortized fair value adjustments (1)		219						198
Total Long-term debt	$	7,968					$	9,120

(1)Upon emergence, we adjusted the carrying value of our debt to fair value. The adjustment consisted of the elimination of the existing unamortized debt issuance costs and unamortized discounts and recording a balance of $236 million as a fair value adjustment. The fair value accounting adjustment is being amortized into interest expense using the effective interest method.

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Additional information regarding our secured and unsecured total long-term debt as of September 30, 2022 and December 31, 2021 is as follows:

	September 30, 2022			December 31, 2021
	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate
Secured debt issued by Frontier
Term loan due 10/8/2027	$	1,453	6.063% (Variable)	$	1,464	4.500% (Variable)
First lien notes due 10/15/2027		1,150	5.875%		1,150	5.875%
First lien notes due 5/1/2028		1,550	5.000%		1,550	5.000%
First lien notes due 5/15/2030		1,200	8.750%		-	n/a
Second lien notes due 5/1/2029		1,000	6.750%		1,000	6.750%
Second lien notes due 11/1/2029		750	5.875%		750	5.875%
Second lien notes due 1/15/2030		1,000	6.000%		1,000	6.000%
IDRB due 5/1/2030		13	6.200%		13	6.200%
Total secured debt issued by Frontier		8,116			6,927
Secured debt issued by subsidiaries
Debentures due 11/15/2031		100	8.500%		100	8.500%
Total secured debt issued by subsidiaries		100			100
Unsecured debt issued by subsidiaries
Debentures due 5/15/2027		200	6.750%		200	6.750%
Debentures due 2/1/2028		300	6.860%		300	6.860%
Debentures due 2/15/2028		200	6.730%		200	6.730%
Debentures due 10/15/2029		50	8.400%		50	8.400%
Total unsecured debt issued by subsidiaries		750			750
Principal outstanding	$	8,966	6.366% (1)	$	7,777	5.702% (1)

(1)Interest rate represents a weighted average of the stated interest rates of multiple issuances.

Credit Facilities and Term Loans

Summaries of our various credit and debt agreements, including our credit agreements and the indentures for our senior secured first lien notes and senior secured second lien notes, are contained in our Annual Report on Form 10-K. The summaries below and in our Form 10-K do not purport to be complete and are qualified in their entirety by reference to the respective agreements filed as an Exhibit to our Annual Report on Form 10-K.

First Lien Notes due 2030

On May 12, 2022, our consolidated subsidiary Frontier Communications Holdings, LLC (“Frontier Holdings”) issued $1.2 billion aggregate principal amount of 8.750% First Lien Secured Notes due 2030 (the “First Lien Notes due 2030”) in an offering pursuant to exemptions from the registration requirements of the Securities Act. We intend to use the net proceeds of this offering to fund capital investments and operating costs arising from our fiber build and expansion of our fiber customer base, and for general corporate purposes.

The First Lien Notes due 2030 are secured by a first-priority lien, subject to permitted liens, by all the assets that secure the issuer’s obligations under its senior secured credit facilities and existing senior secured notes. The First Lien Notes due 2030 were issued pursuant to an indenture, dated as of May 12, 2022, by and among

Frontier Holdings, the guarantors party thereto, the grantor party thereto, Wilmington Trust, National Association, as trustee and JPMorgan Chase Bank, N.A., as collateral agent.

Revolving Facility

On May 12, 2022, Frontier Holdings entered into an amendment (“Amendment No. 2”) to its Revolving Facility. Amendment No. 2, among other things, increased the Revolving Facility by an additional $275 million, to a total of $900 million in aggregate principal amount of revolving credit commitments, and provided that the Revolving Facility be amended to reflect Secured Overnight Financing Rate “SOFR” based interest rates (including a customary spread adjustment).

The $900 million Revolving Facility will be available on a revolving basis until April 30, 2025.

At Frontier’s election, the determination of interest rates for the Revolving Facility is based on margins over the alternate base rate or over SOFR. The interest rate margin with respect to any SOFR loan under the Exit Revolving Facility is 3.50% or 2.50% with respect to any alternate base rate loans, with a 0% SOFR floor.

Subject to customary exceptions and thresholds, the security package under the Revolving Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities and substantially all personal property of Frontier Video, which same assets also secure the First Lien Notes. The Revolving Facility is guaranteed by the same subsidiaries that guarantee the First Lien Notes. After giving effect to $133 million of revolver letters of credit outstanding as of September 30, 2022, the Company has $767 million of available borrowing capacity under the Revolving Facility.