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EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Timothy W. Henry
Phone: (704) 344-8150
E-mail: [email protected]
FAIRPOINT COMMUNICATIONS, INC.
COMPLETES CONSOLIDATION WITHIN FAIRPOINT
COMMUNICATIONS SOLUTIONS CORP.
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CHARLOTTE, N.C. (January 5, 2001) - FairPoint Communications, Inc.
(FairPoint) announced today that its subsidiary, FairPoint Communications
Solutions Corp. (Solutions), a facilities-based competitive local exchange
carrier, has completed its plans for the consolidation of its operations and the
scaling back of its expansion plans.
"Solutions has revised its strategic direction from a rapid growth
mode to an increased focus in established edge-out markets that are near
FairPoint's traditional telephone companies," commented Jack Thomas, CEO and
Chairman of the Board of FairPoint. "We believe we can achieve profitability
more quickly by intensifying our efforts in our existing facilities-based
markets and enhancing our service offerings. This will also significantly reduce
the capital required to fund our business plan. This redirection of resources
will allow us to better achieve our desired business and investment return
objectives," said Thomas.
Today's announcement completes Solutions' implementation of its
consolidation plan that was initiated in December 2000. The company today
eliminated certain employee positions at Solutions' operations center in Albany,
N.Y. and its corporate office in Charlotte, N.C. In addition, Solutions is
closing eight district sales offices and reducing staff at its remaining 15
district sales offices. Approximately 360 employees are affected by the
consolidation announced today. These actions follow the December 18, 2000
announced closing of operations in the Southeast and Southwest which affected
approximately 365 employees.
In connection with the December 18, 2000 consolidation, Solutions
will report a restructuring charge in its fourth quarter. In connection with its
January 2001 consolidation, Solutions will report an additional restructuring
charge in its first quarter results. Solutions estimates the total restructuring
cost will be approximately $40 million.
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"These changes are the result of an exhaustive planning process and
will help position the company for future success. Focusing on our edge-out
markets reduces the required capital investment and enhances the cash flow of
our combined companies," commented Thomas. "The refocus of our strategic
direction to those markets where we are facilities-based will allow Solutions to
continue to add new customers, increase revenues and achieve profitability more
quickly. In those markets where we have closed district sales offices we will
continue to serve our customers from the Albany Operations Center with the same
quality service they have historically received," said Thomas. "We are grateful
to those employees who have made a significant contribution and regret that the
current market conditions have caused us to scale back our growth plans. We
believe these steps are the most prudent response to the recent changes in the
financial markets," concluded Thomas.
The consolidation completed by Solutions will not impact FairPoint's
traditional telephone companies' operations or financial position.
FairPoint Communications Solutions Corp. is a subsidiary of
FairPoint Communications, Inc., an integrated communications provider offering
bundled services, such as local, long distance and enhanced services, as well as
Internet, data and other related communications services to customers in rural
communities. FairPoint was founded in 1993 to take advantage of consolidation
opportunities in the highly fragmented rural market of the telecommunications
industry, and currently serves more than 236,000 rural access lines.
Solutions was established in 1998 as a competitive communications
business to serve business customers primarily in small urban markets adjacent
to FairPoint's existing rural telephone properties. Solutions was created to
complement FairPoint's traditional telephone company business by taking
advantage of the telecommunications industry deregulation by competing with
incumbent carriers in Solutions' target markets situated near its traditional
telephone companies located throughout the United States. Today, Solutions
serves more than 117,000 access lines.
The statements in this news release that are not historical facts
are forward-looking statements that are subject to material risks and
uncertainties. Investors are cautioned that any such forward-looking statements
are not guarantees of future performance or results and involve risks and
uncertainties, and that actual results or developments may differ materially
from those in the forward-looking statements as a result of various factors
which are discussed in previous FairPoint Communications, Inc., filings with the
Securities and Exchange Commission. These risks and uncertainties include, but
are not limited to, uncertainties relating to economic conditions, acquisitions
and divestitures, growth and expansion risks, the availability of equipment,
materials, inventories and programming, product acceptance, and the ability to
construct, expand and upgrade its services and facilities. FairPoint does not
undertake to update any forward-looking statements in this news release or with
respect to matters described herein.
