The rural telephone carrier FairPoint Communications says it will enter Chapter 11 bankruptcy protection. The company has been bogged down by it's 2008 purchase of Verizon's landlines in New England. The acquisition quintupled FairPoint's size to 1.8 million lines. But taking on $2.8 billion in debt in the process proved unmanageable for the company that began as a small rural operator. Meanwhile, the landline business has continued to lose customers nationally.
FairPoint until recently had been a member of the Yonder 40 stock index, the 40 stocks picked by the Daily Yonder to represent the rural economy. Several weeks ago, when it became clear that FairPoint was headed to bankruptcy, the Yonder dropped the company from the listing. FairPoint was replaced by the GreenHaven Continuous Commodity Index Fund (GCC), a commodities fund.
The bankruptcy filing was pre-arranged. The plan will cut FairPoint's debt by $1.7 billion and return nearly full equity ownership to lenders.