You choose, we deliver
If you are interested in this story, you might be interested in others from The Journal Gazette. Go to and pick the subjects you care most about. We'll deliver your customized daily news report at 3 a.m. Fort Wayne time, right to your email.


  • UAW, VW reach agreement
    United Auto Workers leaders said Thursday they have reached a consensus with Volkswagen and expect the German automaker to recognize the union if they sign up enough workers at a new local for the company’s assembly plant in Tennessee.
  • Portugal bank troubles send stocks tumbling
    The specter of Europe’s financial crisis is back to haunt investors.
  • Selling secrets nets 15 years
    A federal judge on Thursday sentenced a California chemical engineer to 15 years in prison and fined him $28.3 million for a rare economic-espionage conviction for selling China a secret recipe for a widely used white pigment. U.

Frontier drops plan to cut debt

– Frontier Communications is retreating from a pledge reiterated two weeks ago to trim leverage as the $2 billion purchase of AT&T’s Connecticut landline business may push its debt burden to a record.

The company’s $850 million worth of 7.125 percent bonds due January 2023 fell to the lowest level since Oct. 2 after Chief Executive Officer Maggie Wilderotter said Frontier is “very comfortable” with net debt exceeding cash flow by more than three times.

That compares with a target of 2.5 that Treasurer Robert Starr projected Dec. 3.

“They had done a good job convincing bondholders they were committed to delevering, and this is a departure from that,” said Mark Stodden, a credit analyst at Moody’s Investors Service, which last week placed Stamford, Conn.-based Frontier’s corporate family rating on review for a possible downgrade.

“This is a negative transaction,” he said.

Frontier may sell $1.9 billion of bonds to help finance the deal, potentially pushing total debt to almost $10 billion from an average of $8.4 billion over the past three years, according to data compiled by Bloomberg.

Frontier is preparing to sell more television and Internet access to people in the territory it’s acquiring after trailing 12-month revenue dropped to $4.8 billion on Sept. 30 from more than $5 billion in all of 2011.

The company’s ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization fell to 3.33 last quarter from more than 4 in 2010, according to a Nov. 5 third-quarter earnings presentation that included the long-term target.

The deal may increase leverage to 3.7 times, based on a 0.4 increase forecast in a presentation last week.