ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On May 28, 2019, Frontier Communications Corporation, a Delaware corporation (the “Company”), Frontier Communications ILEC Holdings LLC, a Delaware limited
liability company and wholly owned subsidiary of the Company (“Intermediate Holdco”), and Northwest Fiber, LLC, a Delaware limited liability company
formed by WaveDivision Capital, LLC in partnership with Searchlight Capital Partners, LLC
(“Purchaser”), entered into a Purchase Agreement (the “Purchase Agreement”). Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, Purchaser has agreed to
acquire from the Company and Intermediate Holdco all of the issued and outstanding equity interests of the subsidiaries of the Company and Intermediate Holdco (the “Transaction”) that operate the Company’s business in
Washington,
Oregon,
Idaho
and
Montana
(the “Business”).
The purchase price to be paid to the Company in connection with the Transaction is $1.352 billion in cash (the “Purchase Price”), subject to certain
adjustments, including for working capital as compared to an agreed target, and certain pension and retiree medical liabilities, in each case as set forth in the Purchase Agreement.
The Purchase Agreement provides that completion of the Transaction is subject to the satisfaction or waiver of customary closing conditions, including, among
other things, obtaining certain required regulatory approvals, including approvals from the Committee on Foreign Investment in the United States, the Federal Communications Commission, the Washington Utilities and Transportation Commission, the
Public Utility Commission of Oregon, the Montana Public Service Commission and certain local video cable franchising authorities representing approximately 85% of the Business’s current subscriber base.
The Purchase Agreement contains customary representations, warranties and covenants related to the Business and the Transaction. Between the date of the
Purchase Agreement and the completion of the Transaction, subject to certain exceptions, the Company has agreed to cause its subsidiaries to operate the Business in the ordinary course of business consistent with past practice and to, among other
things, use commercially reasonable efforts to preserve intact the business organizations, operations and goodwill of the Business.
The Purchase Agreement includes customary termination provisions for both the Company and Purchaser. Both the Company and Purchaser will have the right to
terminate the Purchase Agreement if the closing has not occurred by May 28, 2020.
In connection with the Transaction, the Company has also agreed to provide certain transition services to Purchaser following the Closing on the terms set
forth in the Purchase Agreement. Subject to certain exceptions, the Company has agreed to provide such transition services to Purchaser for no cost for the first six months following the Closing and at agreed upon costs for the remainder of the
applicable service term.
The representations and warranties of the Company, Intermediate Holdco and Purchaser contained in the Purchase Agreement have been made solely for the benefit
of the parties to the Purchase Agreement. In addition, such representations and warranties (a) have been made only for purposes of the Purchase Agreement, (b) have been qualified by confidential disclosures made to Purchaser in connection with the
Purchase Agreement, (c) are subject to materiality qualifications contained in the Purchase Agreement which may differ from what may be viewed as material by investors, (d) were made only as of the date of the Purchase Agreement or such other date
as is specified in the Purchase Agreement and (e) have been included in the Purchase Agreement for the purpose of allocating risk between the Company and Purchaser rather than establishing matters as facts. Accordingly, the Purchase Agreement is
included with this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with any other factual information regarding the Company or Purchaser or their respective subsidiaries
or businesses. Investors should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or Purchaser or any of their respective subsidiaries,
affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s
public disclosures.
The foregoing description of the Purchase Agreement is not complete and is qualified in its entirety by reference to the Purchase Agreement, which is filed as
Exhibit 2.1 to this Form 8-K and is incorporated herein by reference.