Long-Term Debt

9 Months Ended

Sep. 30, 2024

Long-Term Debt [Abstract]

Long-Term Debt

(9) Long-Term Debt:

The activity in long-term debt is summarized as follows:

			For the nine months ended ‎September 30, 2024
			Principal
	January 1,		Payments		New		September 30,
($ in millions)	2024		and Retirements		Borrowings		2024
Secured debt issued by Frontier	$	8,848	$	(410)	$	-	$	8,438
Secured debt issued by subsidiaries		1,633		-		750		2,383
Unsecured debt issued by subsidiaries		750		-		-		750
Principal outstanding	$	11,231	$	(410)	$	750	$	11,571
Less: Debt issuance costs		(71)						(91)
Less: Current portion		(15)						(10)
Less: Debt premium / (discount)		(64)						(46)
Plus: Unamortized fair value adjustments (1)		165						132
Total Long-term debt	$	11,246					$	11,556

⁽¹⁾Upon emergence, we adjusted the carrying value of our debt to fair value. The adjustment consisted of the elimination of the existing unamortized debt issuance costs and unamortized discounts and recording a balance of $236 million as a fair value adjustment. The fair value accounting adjustment is being amortized into interest expense using the effective interest method.

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Additional information regarding our senior unsecured debt, senior secured debt, and subsidiary debt at September 30, 2024 and December 31, 2023 is as follows:

	September 30, 2024			December 31, 2023
	Principal		Interest	Principal		Interest
($ in millions)	Outstanding		Rate	Outstanding		Rate
Secured debt issued by Frontier
Term loan due 10/8/2027	$	-	-	$	1,435	9.220% (Variable)
Term loan due 7/1/2031		1,025	8.763% (Variable)		-	-
First lien notes due 10/15/2027		1,150	5.875%		1,150	5.875%
First lien notes due 5/1/2028		1,550	5.000%		1,550	5.000%
First lien notes due 5/15/2030		1,200	8.750%		1,200	8.750%
First lien notes due 3/15/2031		750	8.625%		750	8.625%
Second lien notes due 5/1/2029		1,000	6.750%		1,000	6.750%
Second lien notes due 11/1/2029		750	5.875%		750	5.875%
Second lien notes due 1/15/2030		1,000	6.000%		1,000	6.000%
IDRB due 5/1/2030		13	6.200%		13	6.200%
Total secured debt issued by Frontier		8,438			8,848
Secured debt issued by subsidiaries
Debentures due 11/15/2031 (2)		47	8.500%		47	8.500%
Series 2023-1 revenue term notes Class A-2 due 7/20/2028		1,119	6.600%		1,119	6.600%
Series 2023-1 revenue term notes Class B due 7/20/2028		155	8.300%		155	8.300%
Series 2023-1 revenue term notes class C due 7/20/2028		312	11.500%		312	11.500%
Series 2024-1 revenue term notes Class A-2 due 5/20/2031		530	6.190%		-	-
Series 2024-1 revenue term notes Class B due 5/30/2031		73	7.020%		-	-
Series 2024-1 revenue term notes Class C due 5/20/2031		147	11.160%		-	-
Total secured debt issued by subsidiaries		2,383			1,633
Unsecured debt issued by subsidiaries
Debentures due 5/15/2027		200	6.750%		200	6.750%
Debentures due 2/1/2028		300	6.860%		300	6.860%
Debentures due 2/15/2028		200	6.730%		200	6.730%
Debentures due 10/15/2029		50	8.400%		50	8.400%
Total unsecured debt issued by subsidiaries		750			750
Principal outstanding	$	11,571	6.997% (1)	$	11,231	7.103% (1)

⁽¹⁾Interest rate represents a weighted average of the stated interest rates of multiple issuances. The anticipated repayment date of July 2028 is used for the Series 2023-1 Revenue Term Notes, classes A-2, B, and C when calculating the weighted average, and the anticipated repayment date of May 2031 is used for the Series 2024-1 Revenue Term Notes, classes A-2, B, and C when calculating the weighted average.

⁽²⁾ $47 million principal amount in remaining debt of our subsidiary Frontier Southwest Incorporated which was defeased in connection with the closing of the August 2023 securitization transaction.

Summaries of our various credit and debt agreements, including our credit agreements and the indentures for our senior secured first lien and senior secured second lien notes, and the indentures for the secured fiber network revenue term notes and secured fiber network revenue variable funding notes are contained in our Annual Report on Form 10-K including agreements filed as exhibits thereto.

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Credit Facilities and Term Loans

Revolving Facility

Subject to customary exceptions and thresholds, the security package under the Revolving Facility includes pledges of the equity interests in certain of our subsidiaries, which is currently limited to certain specified pledged entities and substantially all personal property of Frontier Video, which same assets also secure our First Lien Notes. The Revolving Facility is guaranteed by the same subsidiaries that guarantee the First Lien Notes. After giving effect to approximately $265 million of letters of credit outstanding, we had $660 million of available borrowing capacity under the Revolving Facility as of September 30, 2024.

The Revolving Facility includes customary negative covenants for loan agreements of this type, including covenants limiting Frontier and our restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material payment subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type.

The Revolving Facility also includes certain customary representations and warranties, affirmative covenants, and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, change of control or damage to a material portion of the collateral.

On May 22, 2024, Frontier Communications Holdings, LLC, a subsidiary of Frontier (“Frontier Holdings”), entered into an amendment (the “2024 Credit Agreement Amendment”) to its existing credit agreement that governs its Revolving Facility which, among other things, (i) increased the aggregate amount of certain additional obligations permitted to be outstanding, including first lien debt, and securitization and receivables facilities, and non-loan party debt, from $2,500 million to $5,500 million; provided that at least 40% of the net available cash from the first $1,915 million in securitization and receivables facilities received after May 22, 2024 (excluding net available cash received from drawings with respect to $500 million of commitments of variable funding notes) is applied to prepay the Borrower’s existing term loans and other applicable indebtedness, and 100% of the net available cash from securitization and receivables facilities in excess thereof (up to the cap of $5,500 million) shall be applied to prepay the Borrower’s existing term loans and other applicable indebtedness; (ii) limited future securitizations and receivables facilities to assets located in Texas and/or Florida; and (iii) amended the financial maintenance covenant for the benefit of the Revolving Facility by, commencing with the period ending June 30, 2024, (a) including outstanding securitization and receivables facilities in the calculation of indebtedness and (b) increasing the maximum financial maintenance covenant leverage ratio thereunder to 5.25:1.00, with a step-down to 4.75:1.00 commencing with the period ending March 31, 2027, and continuing thereafter. The 2024 Credit Agreement Amendment became effective on July 1, 2024, when $402 million of net available cash from the securitization closing on such date was applied to prepay existing term loans.

On July 30, 2024, Frontier Holdings entered into a further amendment to its existing credit agreement that governs its Revolving Facility, pursuant to which $50 million of revolving credit commitments of a terminating lender were replaced by $75 million of commitments from a new lender, increasing overall capacity from $900 million to $925 million. The maturity date of the Revolving Facility will be the earliest of (a) April 30, 2028, (b) 91 days prior to the maturity of the term loan facility, (c) unless such notes have been repaid and/or redeemed in full, the date that is 91 days prior to the stated maturity date of our 5.875% First Lien Notes due 2027, and (d) unless such notes have been repaid and/or redeemed in full, the date that is 91 days prior to the stated maturity date of our 5.000% First Lien Notes due 2028.

Term Loan Facility

On July 1, 2024, Frontier Holdings entered into an amendment to the existing Term Loan Facility which, among other things (i) extended the maturity date of $1.025 billion of the Term Loan to July 1, 2031; (ii) lowered (x) the margin over adjusted Term SOFR with respect to the Term Loan from 3.75% to 3.50% and (y) the margin over

the alternative base rate with respect to the Term Loan from 2.75% to 2.50%; and (iii) eliminated the credit spread adjustment previously applicable to the Term Loan.

Subject to certain exceptions and thresholds, the security package under the Term Loan Facility includes pledges of the equity interests in certain of our subsidiaries, which as of the issue date is limited to certain specified pledged entities and substantially all personal property of Frontier Video Services Inc., a Delaware corporation (“Frontier Video”), which same assets also secure the First Lien Notes (as defined below). The Term Loan Facility is guaranteed by the same subsidiaries that guarantee the First Lien Notes.

The Term Loan Facility includes customary negative covenants for loan agreements of this type, including covenants limiting Frontier and our restricted subsidiaries’ (other than certain covenants therein which are limited to subsidiary guarantors) ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans or advances, engage in mergers, consolidations, sales of assets and acquisitions, pay dividends and distributions and make payments in respect of certain material payment subordinated indebtedness, in each case subject to customary exceptions for loan agreements of this type.

The Term Loan Facility also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under ERISA, upon the conversion date, unstayed judgments in favor of a third-party involving an aggregate liability in excess of a certain threshold, change of control, upon the conversion date, specified governmental actions having a material adverse effect or condemnation or damage to a material portion of the collateral.

July 2024 Fiber Securitization Transaction

On July 1, 2024, Frontier Issuer LLC (“Frontier Issuer”), the Company’s limited-purpose, bankruptcy remote, subsidiary completed the issuance of $750 million aggregate principal amount of secured fiber network revenue term notes consisting of $530 million 6.19% Series 2024-1, Class A-2 term notes, $73 million 7.02% Series 2024-1, Class B term notes and $147 million 11.16% Series 2024-1, Class C term notes, each with an anticipated repayment term of seven years (collectively, the “Notes”). Collectively, the Notes have a weighted average yield of approximately 7.4%. The Notes are secured by certain of Frontier’s fiber assets and associated customer contracts in the North Texas area, in addition to those in the Dallas Metropolitan area contributed in the Series 2023-1 Notes offering, and qualify as green bonds.

Security	Issue Date	Amount Outstanding		Interest Rate (1)	Anticipated Repayment Date	Final Maturity Date
Series 2023-1, Class A-2 term notes	August 8, 2023	$	1,119,000,000	6.60%	July 20, 2028	August 20, 2053
Series 2023-1, Class B term notes	August 8, 2023	$	155,000,000	8.30%	July 20, 2028	August 20, 2053
Series 2023-1, Class C term notes	August 8, 2023	$	312,000,000	11.50%	July 20, 2028	August 20, 2053
Series 2024-1, Class A-2 term notes	July 1, 2024	$	530,000,000	6.19%	May 20, 2031	June 20, 2054
Series 2024-1, Class B term notes	July 1, 2024	$	73,000,000	7.02%	May 20, 2031	June 20, 2054
Series 2024-1, Class C term notes	July 1, 2024	$	147,000,000	11.16%	May 20, 2031	June 20, 2054

⁽¹⁾ If Frontier Issuer has not repaid or refinanced any Class of Notes of a Series of Fiber Term Notes prior to the Anticipated Repayment Date, additional interest will accrue thereon in an amount equal to the greater of (i) 5.00% per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such note: (A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the ARD for such note of the United States Treasury Security having a remaining term closest to 10 years plus (B) 5.00% plus (C) the post-ARD note spread applicable to such Note.

In addition, on July 1, 2024, Frontier amended its Secured Fiber Network Revenue Variable Funding Notes, Series 2023-2, Class A-1, facility (the “VFN Amendment”) to reduce the available Variable Funding Notes commitment amount to $0, with the ability to increase the commitment amount up to $500 million in the future upon the satisfaction of certain conditions, and to extend the maturity date to June 2028.