The Charlotte, N.C.-based provider’s stocks had plunged nearly 30 percent by 2:11 p.m. Eastern; FairPoint earlier had said it has forged a forbearance agreement with lenders. All told, those companies hold more than 50 percent of the debt on FairPoint’s credit facility.
The new deal gives FairPoint a pass on paying the $42 million in interest and principal that’s due on Wednesday.
“Today’s action by our lenders demonstrates that our discussions are progressing in a positive manner and allows additional time for a permanent restructuring plan to be resolved,” David Hauser, chairman and CEO of FairPoint, said in a prepared statement.
FairPoint’s creditors said they won’t speed up the maturity of the outstanding loans until the end of October.
The agreement comes as FairPoint works to restructure its business plan. The company needs to cut its debt and interest expenses and get more cash flow. If it can’t do that, the company warns it may have to file for Chapter 11 protection. FairPoint still is dealing with the fallout over its purchase of Verizon lines in New England last year, and it risks getting thrown off the New York Stock Exchange for non-compliance.