Message to FairPoint shareholders: Merger with Verizon could leave shareholders “holding the bag”

IBEW and CWA to urge “no” vote at annual meeting

FairPoint shareholders will receive paper bags with a message that the proposed deal to acquire Verizon's assets in Maine, New Hampshire and Vermont would “pose unacceptably high risks” that could “leave shareholders holding a costly bag” of customer complaints, antiquated equipment and potentially expensive PUC findings.

The unions are calling on shareholders to vote “no” on the proposed “Agreement and Plan of Merger” with Verizon at FairPoint’s annual meeting set for 9:00 AM in Charlotte, NC.

“We are concerned that FairPoint’s business model is to acquire small companies and then use the cash flow from those companies to pay inflated dividends at the expense of the long-term health of the company,” said Jim Voye, research director for the International Brotherhood of Electrical Workers in Washington, DC. “But that model won’t work in New England. The telephone lines and equipment are old and there are potentially costly regulatory decisions pending.”

“Who’s kidding who here,” said Chris Shelton, Vice President of CWA District One, which includes 180,000 members throughout the Northeast. “The cash flow from these access lines will have to be plowed back into network upgrades in order to satisfy regulators and customers who are demanding improved service quality. Management’s projected profit windfall from this deal is an illusion. FairPoint shareholders should vote ‘No” or be left holding a bag full of customer complaints and employee problems.”

Wall Street appears to share these concerns. When the sale was announced on January 16, 2007 FairPoint’s stock price shot up 15.5 percent to $20.41 a share. But by August 13, the price had fallen to $15.68 a share, suggesting serious concerns about FairPoint’s financial viability if the sale is approved.

A movement in all three states to oppose the deal has been growing because of concerns that FairPoint’s small size and fragile finances won’t allow it to provide better service or make significant upgrades in the availability of high speed Internet access. Copies of the leaflet for FairPoint shareholders are available from Rand Wilson.