Yes, it seems backwards that Verizon will make the move. But here’s the setup: New Communications Holdings Inc., the subsidiary, was formed by Verizon as part of the transaction with Frontier. But as soon as the sale goes through, New Communications Holdings will be combined with Frontier.
The debt sale will make up part of special cash payment New Communications Holdings will make to Verizon. The gross proceeds will go into an escrow account until the spinoff and sale happen.
The first series of notes will come due 2017; the second will be due 2020.
Frontier is trying to buy rural wireline assets in 14 states. Several states have approved the deal but one in particular, Illinois, is recommending regulatory commissioners nix the deal. Frontier intends to pay about $5.5 billion in stock for the lines and take on about $3.3 billion in debt. Several unions and consumer groups also oppose the Verizon-Frontier agreement.
Shares of Frontier were trading slightly higher, reaching $7.44 by about 2:20 p.m. Eastern on Thursday.