Frontier Communications, the provider of telecom services in 29 states, has filed Chapter 11 bankruptcy as part of its restructuring support agreement to cut its debt by more than $10 billion.

The agreement is supported by 75% of Frontier’s bondholders. The company also received $460 million in debtor-in-possession (DIP) financing.

Frontier said the agreement provides financial flexibility to support continued investment in its long-term growth.

Last month, the company said it would defer making interest payments as it continued discussions with creditors regarding its $17.5 billion debt load.

Frontier is the latest company in the channel to file Chapter 11 bankruptcy, following Windstream, Fusion Connect and Sungard AS.

Frontier’s Bernie Han

“With this agreement with our bondholders, we can now focus on executing our strategy to drive operational efficiencies and position our business for long-term growth,” said Bernie Han, Frontier’s president and CEO. “At the same time, the COVID-19 pandemic continues to impact the entire business community, and our team is focused on ensuring the health and safety of our employees and customers. The services we provide to our customers keeps them connected, safe and informed, and I would like to thank our team for their continued dedication, especially in light of the current environment.”

Frontier will continue providing service to its customers without interruption. It also will work with its business partners as usual throughout the court-supervised process.

Following court approval, Frontier’s liquidity will total over $1.1 billion. This liquidity, combined with cash flow from ongoing operations, should meet Frontier’s operational and restructuring needs.

“With a recapitalized balance sheet, we will have the financial flexibility to reposition the company and accelerate its transformation by allocating capital resources and adding talent to enhance our service offerings to our customers while optimizing value for our stakeholders,” said Robert Schriesheim, who chairs the finance committee of Frontier’s board of directors. “Under the [agreement], our trade vendors will be paid for goods and services provided both before and after the filing date.”

Omdia’s Brian Washburn

Brian Washburn, an analyst with Omdia, said Frontier’s operations no doubt will continue while in bankruptcy. Earlier this month, he said the COVID-19 pandemic could complicate the process.

“Interruption in service is unthinkable for a lifeline telecommunications provider,” he said. “Frontier’s operating figures sans debt are sound, so of course the company’s operations will — and must – proceed.”

Telecoms have a lot of premium value-adds, Washburn said. But at its most basic, it remains an essential utility that keeps people and businesses connected, he said.

“Frontier’s core business model is solid, so securing a financial DIP lifeline through bankruptcy should never have been in question,” he said. “But these are unique times. Likewise, any asset sale that had already been under agreement to sell prior to Chapter 11 ought to carry through, it now just needs to get court approval. I see no surprises here and wouldn’t expect any change in course.”

Frontier is proceeding with the $1.35 billion sale of its operations and assets in Washington, Oregon, Idaho and Montana. WaveDivision Capital in partnership with Searchlight Capital Partners is acquiring the assets. The deal is expected to close next month.

Once completed, Frontier will operate in 25 states.

The Communications Workers of America (CWA) issued the following statement regarding the bankruptcy filing:

“Frontier’s front-line employees have a unique insight into the challenges — and opportunities — that the company faces. Unfortunately, Frontier’s management did not engage with CWA members or leadership as part of their negotiations with creditors, denying their workforce a much-needed voice in the future of the company. CWA members expect to have input in the direction of the company as the bankruptcy process goes forward. We call on Frontier and its creditors to work quickly to put Frontier on a strong financial footing and prioritize the long-term gains that will come from investment in Frontier’s network over extracting cash from the company for short-term profit.”