8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported )					January 8, 2008
		FairPoint Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware				333-56365				13-3725229
(State or other jurisdiction of incorporation)				(Commission File Number)				(IRS Employer Identification No.)
	521 East Morehead Street, Suite 250, Charlotte, North Carolina						28202
	(Address of principal executive offices)						(Zip Code)
Registrant's telephone number, including area code						(704) 344-8150
			N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[X] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 – Other Events.

On January 8, 2008, FairPoint Communications, Inc. (the “Company”), Verizon New England Inc. (“Verizon New England”), the Vermont Department of Public Service (the “Department”) and certain affiliates of Verizon New England filed a joint stipulation (the “Stipulation”) with the State of Vermont Public Service Board (the “VPSB”) relating to the Company’s proposed acquisition of the local exchange business and related landline activities of Verizon Communications Inc. (“Verizon”) in Vermont, Maine and New Hampshire through a merger of Northern New England Spinco Inc. (“Spinco”), a subsidiary of Verizon, with and into the Company (the “Merger”).  The Stipulation constitutes a recommendation by the parties thereto to the VPSB to approve the Merger subject to the terms and conditions contained in the Stipulation.

The Stipulation provides for, among other things: (i) the Company making minimum capital expenditures in Vermont of $41 million and $40 million, respectively, in the first year and the succeeding two years following the consummation of the Merger; (ii) a 35% reduction in the Company's anticipated annual dividend rate following the Merger until such time as the Company satisfies certain financial conditions set forth in the Stipulation; (iii) restrictions on the Company’s ability to pay dividends if following the third full fiscal quarter following the closing of the Merger the Company does not satisfy specified financial ratio tests set forth in the Stipulation; (iv) the Company paying annually the greater of $35 million or 90% of Free Cash Flow (defined in the Stipulation as the cash flow remaining after all operating expenses, interest payments, tax payments, capital expenditures, dividends and other routine cash expenditures have occurred) to reduce the principal amount of the term loan which the Company expects to obtain in connection with the Merger; (v) the Company’s adopting a Performance Enhancement Plan to solidify its commitment to improve service quality and broadband availability in Vermont; and (vi) an independent third party monitor for the Transition Services Agreement cutover process for the conversion from Verizon’s systems to the Company’s systems.  In addition, pursuant to the Stipulation, Verizon New England will provide at or before closing a contribution to Spinco that will increase Spinco’s working capital in the amount of $235.5 million in addition to the amount specified for working capital in the Distribution Agreement between Verizon and Spinco as in effect as of the date of the Stipulation, which amount is to be used by the Company to reduce the term loan which the Company expects to obtain in connection with the Merger (either by incurring less indebtedness or by repaying the term loan amount not later than 30 days after the closing of the Merger).

The VPSB may adopt or reject the Stipulation in its entirety or make modifications to the Stipulation.

The foregoing summary of the Stipulation is qualified in its entirety by reference to the full text of the Stipulation which is being furnished by being attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On January 8, 2008, the Companyissued a press release announcing the Stipulation (the “Press Release”). The Press Release is being furnished by being attached hereto as Exhibit 99.2.

The Company has filed, and the Securities and Exchange Commission (“SEC”) has declared effective, a registration statement in connection with the Merger pursuant to the Agreement and Plan of Merger, dated as of January 15, 2007, by and among the Company,

Verizon and Spinco, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of April 20, 2007, Amendment No. 2 to Agreement and Plan of Merger, dated as of June 28, 2007, Amendment No. 3 to Agreement and Plan of Merger, dated as of July 3, 2007, and Amendment No. 4 to Agreement and Plan of Merger, dated as of November 16, 2007, in each case, by and among the Company, Verizon and Spinco.  The Company urges investors to read this document and other materials filed and to be filed by the Company relating to the Merger because they contain and will contain important information.  Investors may obtain free copies of the registration statement, as well as other filed documents containing information about the Company and the Merger, at www.sec.gov, the SEC’s website.  Investors may also obtain free copies of these documents and the Company’s other SEC filings at www.fairpoint.com under the Investor Relations section, or by written request to FairPoint Communications, Inc., 521 E. Morehead Street, Suite 250, Charlotte, NC 28202, Attention: Investor Relations.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Item 9.01         Financial Statements and Exhibits.

(c) Exhibits

Exhibit Number	Description
99.1	Stipulation filed with the State of Vermont Public Service Board on January 8, 2008
99.2	Press Release, dated January 8, 2008

The information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section.  The information in this Current Report, including the exhibits attached hereto, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ John P. Crowley
	Name:   John P. Crowley
	Title:     Executive Vice President and
	Chief Financial Officer

Date:  January 8, 2008

EX-99.1

Exhibit 99.1

STATE OF VERMONT

PUBLIC SERVICE BOARD

Joint Petition of Verizon New England Inc.,	)
d/b/a Verizon Vermont, Certain Affiliates	)
Thereof, and FairPoint Communications,	)	Docket No. 7270
Inc. for approval of an asset transfer,	)
acquisition of control by merger and	)
associated transactions	)

STIPULATION AMONG FAIRPOINT COMMUNICATIONS, INC.,

VERIZON NEW ENGLAND INC. AND THE VERMONT

DEPARTMENT OF PUBLIC SERVICE

With respect to the above-captioned docket, FairPoint Communications, Inc. (“FairPoint”), Verizon New England Inc., d/b/a Verizon Vermont on behalf of itself and its affiliates NYNEX Long Distance Company, Verizon Select Services Inc., Bell Atlantic Communications Inc., Northern New England Telephone Operations LLC, and Enhanced Communications of Northern New England Inc. (collectively, “Verizon”), and the Vermont Department of Public Service (“Department” or “DPS”) stipulate and agree as follows:

WHEREAS, on January 31, 2007, Verizon and FairPoint filed a Joint Petition under 30 V.S.A. § 107, 109, 231 and 311, seeking an order approving the transaction pursuant to which FairPoint will acquire Verizon’s local exchange and long distance businesses in Vermont (the “Proposed Merger and Related Transactions”);

WHEREAS, the Vermont Public Service Board (the “Board”) issued an order dated December 21, 2007 in which the Board denied the petition filed by FairPoint and Verizon and stated that: “we are persuaded that the proposed acquisition offers potential benefits to the Vermont customers now served by Verizon: (1) improved service quality; (2) expansion of broadband coverage to reach over 80 percent of Verizon’s current customers, along with faster

speeds; (3) a commitment to make adequate investment in the infrastructure; (4) expanded service offerings; and (5) the presence of a company whose major interest is providing wireline telecommunications service in Vermont and the other northern New England states;”

WHEREAS, the Board stated that “because of these potential benefits, we remain open to a new filing from FairPoint that seeks to address the financial concerns that we describe in this Order,” and stated that “we will leave this docket open for a period of time to permit FairPoint and Verizon to modify their proposal” to address the Board’s concerns;

WHEREAS, the Board further stated “but for these financial risks, we would approve the merger;” and

WHEREAS, the Department filed testimony raising certain concerns regarding the proposed transaction, and since the issuance of the order the Department, FairPoint and Verizon have engaged in settlement negotiations and have settled certain matters pertaining to the joint petition of FairPoint and Verizon.

NOW, THEREFORE, FairPoint, Verizon and the Department stipulate and agree as follows:

1. Capital Expenditures/Dividend Restriction. During the three years following the Closing Date, FairPoint shall make, on average, annual capital investments in Vermont in the following minimum amounts:

First Year:                                                                            $ 41,000,000.00

Average of First Two Years:                                            $ 40,000,000.00

Average of First Three Years:                                          $ 40,000,000.00

To assure investment in the network occurs as projected by FairPoint, total dividend payments by FairPoint to its common shareholders following the two year anniversary of

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the closing will be reduced the following year by the amount in which the annual average capital expenditures made in Vermont over the two years is less than $40 million, and dividends paid in the year following the three year anniversary will be reduced by the amount in which the annual average capital expenditures over the three-year period is less than $40 million.

2.            Further Dividend Restrictions.

(a) Beginning with the first full quarterly dividend paid after the closing of the Merger, FairPoint shall reduce its aggregate annual dividends payable on common stock (currently $1.59 per share) by 35% which is effectively an annual reduction of approximately $49.7 million from current projected levels after the Merger. FairPoint shall not be allowed to subsequently increase its per share dividend until this limitation is terminated pursuant to paragraph 4.

(b) FairPoint shall not declare or pay any dividend on the common stock of FairPoint following the end of any three consecutive fiscal quarters during which the Leverage Ratio exceeds 5.50 (reduced to 5.0 at and after the fifth full calendar quarter following the Closing Date) or the Interest Coverage Ratio is less than 2.25. FairPoint shall use funds that would otherwise be available to pay dividends but for this restriction to first repay outstanding borrowings under its revolving credit agreement and second to prepay Term Loan borrowings (unless the loan agreements require a different order of payment) until such repayments reduce the debt as of the end of the last respective quarter such that the Leverage Ratio is reduced to 5.5 or 5.0, respectively. (There will not be any limitation on dividends paid during the first two full fiscal quarters following the closing beyond the reduction agreed to in paragraph 2(a).)

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(c) FairPoint shall limit the cumulative amount of payments of dividends on its outstanding common stock (excluding the first two full quarterly dividend payments after the closing) to not more than the cumulative adjusted free cash flow (before dividends) generated from and after the Closing Date.

(d) The conditions in paragraphs (b) and (c) will not be effective until the third full fiscal quarter following the closing, to be consistent with the proposed credit agreement. For all purposes in this Stipulation Leverage Ratio shall be defined as the ratio of Total Indebtedness to Adjusted EBITDA. In calculating the Leverage Ratio, for purposes of this Stipulation, FairPoint shall use the outstanding gross debt amount reduced by any available cash balance, provided that the amount of cash netted against gross debt shall be no more than $25 million. The definitions of Total Indebtedness and Adjusted EBITDA shall be the same as those contained in FairPoint's current loan documents and as modified by the terms of the new loan documents.

3. Debt Reduction. Beginning in the first quarter of 2009, FairPoint agrees to pay the higher of $35,000,000 annually, or 90% of annual Free Cash Flow, to be applied equally in each fiscal quarter, towards the permanent reduction of the principal amount of the Term Loan(s).  Free Cash Flow is defined as the cash flow remaining after all operating expenses, interest payments, tax payments, capital expenditures, dividends and other routine cash expenditures have occurred.  (For the first year of operations, this calculation would include all adjustments permitted by the current and the new loan documents.)

4. Termination of Financial Conditions. The requirements and conditions in paragraphs 2(a), (b) & (c) and 3, above, shall terminate upon FairPoint achieving a

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Leverage Ratio of 3.5 for any three consecutive fiscal quarters, provided that if within two years of the end of such three consecutive fiscal quarters achieving the Leverage Ratio of 3.5, the Leverage Ratio exceeds 4.0 for any three consecutive quarters, the limitations and conditions in paragraphs 2(a), (b) & (c) and 3 will become effective and remain effective until the earlier of five years after the end of such three consecutive fiscal quarters achieving a Leverage Ratio of 3.5 or ten years after the Closing Date. In any event, the limitations and conditions in paragraphs 2(a), (b) & (c), 3 and 4 shall terminate no later than ten years after the Closing Date. (For the purpose of clarity, if over the ten year period FairPoint does not achieve the Leverage Ratio of 3.5 for three consecutive quarters, the limitations and conditions remain in effect over the entire ten year period.)

5. Working Capital Adjustment. Verizon will provide at or before closing a contribution to Northern New England Spinco Inc. (“Spinco”) that will increase Spinco's working capital in the amount of $235.5 million in addition to the amount specified for working capital in the Distribution Agreement as of the date hereof. FairPoint shall use $235.5 million to repay permanently (or otherwise not incur), not later than 30 days after the closing of the Merger, the Term Loan or the Spinco Securities issued or incurred at closing.

6. At closing, FairPoint will adopt the Performance Enhancement Plan to support its service quality and broadband commitments, attached to the Stipulation as Attachment A-1.  The Department, Verizon and FairPoint agree that as a result of the agreements and merger conditions contained in this Stipulation, there is no need for the Board to include

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the Department’s proposed condition number 6 (concerning restrictions on cash transfers to the FairPoint parent company) in its order.

7. FairPoint has agreed to an independent third party monitor for the Transition Services Agreement cutover process pursuant to the scope of work (“FairPoint Cutover Monitoring Statement of Scope”, attached as Attachment A-2) established by representatives of the Department, the Maine Public Utilities Commission and the New Hampshire Public Utilities Commission, to be paid for by FairPoint.

8. Prior to the Merger closing, Verizon, Spinco and FairPoint shall amend their transaction agreements to the extent required to reflect the applicable terms expressly set forth herein.

9. FairPoint, Verizon and the Department agree that the Board should approve the Proposed Merger and Related Transactions pursuant to 30 V.S.A. §107, 109, 231 and 311, subject to the conditions set forth in Paragraphs 1-7 of this Stipulation and the conditions outlined in Appendix B of the Board’s order in this docket dated December 21, 2007, other than those conditions for which FairPoint and Verizon seek modification or reconsideration in a timely fashion.  Nothing in this stipulation shall bar FairPoint or Verizon from seeking reconsideration or modification of any of the Board's proposed conditions in Appendix B, nor shall the Department be foreclosed from opposing any such request.  The Department agrees that, subject to these conditions, such transactions (including designation of Northern New England Telephone Operations LLC, as an Eligible Telecommunications Carrier under 47 U.S.C. §214( e ) and in

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compliance with 47 C.F.R. §54.201), will promote the public good and the general good of the state.

10. FairPoint, Verizon and the Department agree to devote their best efforts toward Board approval of this Stipulation.

11. The parties agree that this Stipulation shall not be construed by any party or tribunal as having precedential impact on any future proceeding involving the parties, except as necessary to implement this Stipulation or to enforce an order of the Board resulting from this Stipulation.

12. This Stipulation shall be approved without modification or additional condition on the subjects addressed herein. This Stipulation represents the only agreement between the parties to the Stipulation and rejection of any part of this Stipulation constitutes a rejection of the whole and the Stipulation shall thereafter be null and void. In the event that the Merger does not close or this Stipulation and its terms are not adopted by the Board in their entirety and without modification, this Stipulation and all of the terms and conditions contained herein shall be null and void.

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Dated: January 8, 2008.

VERIZON NEW ENGLAND INC., NYNEX LONG
DISTANCE COMPANY, VERIZON SELECT SERVICES
INC., BELL ATLANTIC COMMUNICATIONS, INC.,
NORTHERN NEW ENGLAND SPINCO INC.,
NORTHERN NEW ENGLAND TELEPHONE
OPERATIONS LLC and ENHANCED
COMMUNICATIONS OF NORTHERN NEW
ENGLAND INC.

By their attorneys:

Dated: January 8, 2008 /s/ Alexander W. Moore

Alexander W. Moore

185 Franklin Street, 13th Floor

Boston, MA  02110-1585

Peter H. Zamore

Sheehey Furlong & Behm P.C.

30 Main Street, 6th Floor

Burlington, VT  05402-0066

FAIRPOINT COMMUNICATIONS, INC.

By its attorneys:

Dated: /s/ Shirley J. Linn

Shirley J. Linn

Executive Vice President

and General Counsel

521 E. Morehead Street, Suite 250

Charlotte, NC  28202

Nancy S. Malmquist

Downs Rachlin Martin PLLC

90 Prospect Street, P.O. Box 99

St. Johnsbury, VT  05819-0099

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VERMONT DEPARTMENT OF PUBLIC SERVICE

By its attorneys:

Dated: January 8, 2008 By:          /s/ June E. Tierney

June E. Tierney, Esq.

Special Counsel

Drawer 20

Chittenden Bank Building

112 State Street

Montpelier, VT  05620-2601

James H. Porter III, Esq.

Special Counsel

Drawer 20

Chittenden Bank Building

112 State Street

Montpelier, VT  05620-2601

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Attachment A-1

Intentionally omitted

Attachment A-2

Intentionally omitted

EX-99.2

Exhibit 99.2

 

FOR IMMEDIATE RELEASE

Investor Contact:	Brett Ellis
	(866) 377-3747
	bellis@fairpoint.com
Media Contact:	Rose Cummings
	(704) 602-7304
	rcummings@fairpoint.com

FAIRPOINT REACHES AGREEMENT WITH VERMONT

DEPARTMENT OF PUBLIC SERVICE

Files Motion Asking Vermont Public Service Board to Approve Modified
Transaction

CHARLOTTE, N.C. (January 8, 2008) – FairPoint Communications, Inc. (NYSE: FRP) today announced it has reached an agreement (stipulation) with the Vermont Department of Public Service (Department) regarding its proposed acquisition of Verizon’s wireline operations in Vermont. The stipulation incorporates key features of the previously approved amended stipulation agreement in Maine, as well as other conditions. In the stipulation FairPoint, Verizon, and the Department urge the Vermont Public Service Board (Board) to approve the merger, subject to the conditions stated in the stipulation and the conditions outlined in Appendix B of the Board’s December 21, 2007 order  (other than those conditions for which FairPoint and Verizon seek timely modification or reconsideration).

In the stipulation, the Department also agrees that subject to the conditions, the merger transaction “will promote the public good and the general good of the state.”  FairPoint and Verizon also filed a motion today requesting the Board approve the transaction as modified.

FairPoint’s acquisition of Verizon’s wireline operations in Vermont is part of a larger, previously announced transaction in which FairPoint would also acquire Verizon’s wireline operations in Maine and New Hampshire. The transaction requires approval by the three states’ regulatory agencies and by the Federal Communications Commission. Maine’s Public Utilities Commission has already voted to approve an amended stipulation agreement and other conditions, with some remaining matters subject to further deliberations later this week.

Gene Johnson, FairPoint’s chairman and CEO, stated, “We’re pleased with the stipulation and appreciate the hard work and support of the Vermont Department of Public Service. We look forward to working with the Department as we serve the public interest in the state of Vermont.”

In addition to those key, previously approved conditions in the Maine stipulation, FairPoint agreed to additional conditions in Vermont, which include:

§   The commitment to make approximately $40 million in capital expenditures in Vermont in each of the first three years following transaction close;

§   Additional broadband expansion in Vermont to ensure broadband is available to all customers in at least 50 percent of FairPoint’s markets by December 31, 2010;

§   The adoption of a Performance Enhancement Plan that further solidifies FairPoint’s commitment to improve service quality and expand broadband availability;

-more-

§   FairPoint agreed to an independent third party monitor for the back-office cutover process (the conversion from Verizon’s systems to FairPoint’s systems); and

§   The adoption of a dual pole remediation project.

About FairPoint

FairPoint Communications, Inc. is an industry leading provider of communications services to rural and small urban communities across the country. Today, FairPoint owns and operates 30 local exchange companies in 18 states offering advanced communications with a personal touch including local and long distance voice, data, Internet, video and broadband services. FairPoint is traded on the New York Stock Exchange under the symbol FRP.  Learn more at www.fairpoint.com.

This press release may contain forward-looking statements by FairPoint that are not based on historical fact, including, without limitation, statements containing the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions and statements. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in FairPoint’s filings with the Securities and Exchange Commission ("SEC"), including, without limitation, the risks described in FairPoint’s most recent Annual Report on Form 10-K on file with the SEC.  These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements.  All information is current as of the date this press release is issued, and FairPoint undertakes no duty to update this information. 

FairPoint has filed, and the SEC has declared effective, a registration statement in connection with the proposed merger.  FairPoint urges investors to read this document and other materials filed and to be filed by FairPoint relating to the proposed merger because they contain and will contain important information.  Investors can obtain copies of the registration statement, as well as other filed documents containing information about FairPoint and the proposed merger, at www.sec.gov, the SEC’s website. Investors may also obtain free copies of these documents and FairPoint’s other SEC filings at www.fairpoint.com under the Investor Relations section, or by written request to FairPoint Communications, Inc., 521 E. Morehead Street, Suite 250, Charlotte, NC 28202, Attention: Investor Relations.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Source: FairPoint Communications, Inc., www.fairpoint.com.

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