Frontier bankruptcy plan draws fire from Tong, union
Connecticut Attorney General William Tong and the president of Local 1298 of the Communications Workers of America are telling state utility regulators they are skeptical of Frontier Communications’ plans to emerge from Chapter 11 bankruptcy protection.
Tong and the Hamden-based union local that represents more than 1,600 Frontier workers raised their concerns in separate legal briefs filed with the state’s Public Utilities Regulatory Authority. Frontier’s plan to emerge from bankruptcy is being reviewed by PURA because it essentially involves a change of control.
The company filed for federal bankruptcy protection April 15. Under Frontier’s plan, four investment firms will own between 20 percent and 28 percent of a new, as yet unnamed holding company.
The four investment companies are Elliott Management, Franklin Mutual, Golden Tree Asset Management and HG Vora.
In his brief, Tong urged an outright rejection of the plan, saying “the entire transaction presents substantial risks to Connecticut, including a loss of local control, loss of capital investment, and degradations in the quality of service.”
“The petitioners have not met their burden of demonstrating the new management’s suitability to provide safe, adequate or reliable service to the public,” he said in the brief. “In fact, they have not even identified who that management might be. This failure is compounded by the absence of any commitments whatsoever to protect the interests of Connecticut customers or with any demonstration that the transaction is in the public interest.”
Norwalk-based Frontier, which has a telecommunications hub in New Haven, is seeking to unload more than $10 billion in debt and obligations through bankruptcy, according to Tong.
The brief file by CWA Local 1298 doesn’t explicitly call for PURA to reject the change of control proposal contained in the bankruptcy plan. Instead, union representatives are calling on PURA to impose strict, enforceable conditions that require the profits and cash flow generated in Connecticut to be reinvested in Connecticut’s network.
“The CWA members who work at Frontier know firsthand what the company needs to do to come out of this bankruptcy process stronger and ready to provide quality service to its customers,” said David Weidlich, president of Local 1298. “That’s why we want to make sure that PURA uses its oversight process to hold Frontier accountable to its consumers and workers — not Wall Street hedge funds like Elliott Management that only care about making a quick buck.”
Javier Mendoza, Frontier’s vice president of corporate communications and external affairs, said the company’s restructuring plan, which includes eliminating nearly $1 billion in interest obligations, “will enable it to make investments in its network and operations, and to continue to be a competitive provider of communications services in Connecticut and twenty-four other states.”