Frontier Communications Corp. will forgo coupon payments due March 15 as it prepares to file for bankruptcy with a plan that cuts its debt and hands control of the company to existing creditors, according to people with knowledge of the plans, Bloomberg News reported. A Frontier bankruptcy would rank as one of the biggest telecom reorganizations since Worldcom Inc. in 2002. Frontier is holding discussions this week with prospective lenders to negotiate the terms of a debtor-in-possession loan. The telecom operator plans to file for bankruptcy after the coupon date although the situation is still somewhat fluid and subject to change. Skipping the bond payments will trigger a 30-day grace period. Frontier shares plunged as much as 22 percent on the news and its 8.5 percent notes due April 2020 fell 6 cents on the dollar to 42.5 cents. Its 8 percent notes dues April 2027 rose 2 cents on the dollar to 102.25 cents, reflecting investor optimism that they could get paid in the long term. Frontier has spent months in talks with advisers and creditors about possible solutions to addressing its $17.5 billion debt load, which has become a burden as customers move away from using land lines. The company relies heavily on copper and fiber-optic cabling to provide service. Bernie Han, the company’s new chief executive officer, has been under pressure to act before March 15, when more than $320 million of debt payments are due. Frontier previously signaled it was pursuing a mid-March filing as talks between creditor groups picked up. Frontier is getting advice from lawyers at Kirkland & Ellis LLP and investment bankers at Evercore Inc.
