Talks are heating up between Frontier Communications Corp. and its creditors over a potential restructuring of its $17 billion debt load, Bloomberg News reported. Advisers for three groups of creditors have held informal discussions with Frontier ahead of $2.7 billion of debt maturities in 2022, according to people with knowledge of the matter. Those notes trade at deeply distressed levels, and the company has signaled it may be ready for a more official process by adding board members with turnaround experience. No formal proposals have been submitted so far, and Frontier hasn’t indicated what it plans to do yet. A group including Elliott Management Corp., Apollo Global Management LLC, Franklin Resources Inc. and Capital Group Cos. had proposed swapping their unsecured debt into new secured notes in an out-of-court transaction, with some members also favoring a chapter 11 bankruptcy filing, the people said. The other creditor groups prefer a bankruptcy filing, in part to avoid seeing their holdings pushed down in priority through a debt swap. The group including Elliott, Apollo, Franklin and Capital Group holds about 60 percent of so-called CTF unsecured bonds maturing in 2022 and 2025. Some creditors in that group are believed by market participants to have sold credit-default swaps insuring against a Frontier default. That would skew their interests against a chapter 11 filing. A second group of creditors holds “legacy,” or non-CTF, bonds, and a third group of creditors owns a mix of CTF and legacy bonds.
