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August 17, 2010

CEO of FairPoint is asked to resign

Creditors want someone from outside to run FairPoint as it tries to emerge from bankruptcy.

By DAVE GRAM The Associated Press

MONTPELIER, Vt. — FairPoint Communications' secured creditors have asked CEO David Hauser to resign less than 14 months after he came aboard in a failed effort to steer the firm away from insolvency, the company said in bankruptcy court papers Monday.

The company said it was seeking approval to appoint Paul H. Sunu as its new chief executive.

"This is not unusual in a bankruptcy situation, where secured lenders like to put in their own person," said Hauser, a former Duke Energy chief financial officer who came out of retirement to lead FairPoint.

He said he would stay on as a consultant to Sunu while the company emerges from Chapter 11 bankruptcy court protection.

FairPoint, which is based in Charlotte, N.C., got into trouble shortly after growing sixfold by buying the main landline networks in Maine, New Hampshire and Vermont from Verizon Communications for $2.3 billion. It initially bungled its efforts to take over the Verizon networks in the three states, and Hauser replaced former CEO Gene Johnson about six months later.

FairPoint fielded many complaints about billing, delayed connections for new customers and other service problems.

Fairpoint has proposed a plan for emerging from bankruptcy that involves cutting its debt from $2.7 billion to $1 billion and continuing its drive – acknowledged by regulators – to improve service to retail customers as well as to other communications carriers that rely on its networks.

A snag in the company's plan has been the Vermont Public Service Board, which has yet to approve the plan.

 

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