MONTPELIER, Vt. - Vermont regulators rejected FairPoint Communications' proposed $2.7 billion buyout of Verizon Communications' land lines in northern New England, citing concerns about the company's financial viability.
In a decision that pulls the plug -- for now -- on the three-state deal, the Vermont Public Service Board denied the petition by FairPoint Communications, of Charlotte, N.C.
"The Board found that FairPoint had not demonstrated that it would be financially sound as it seeks to operate the newly-acquired territories in Vermont, Maine and New Hampshire -- a service territory that has five times the number of access lines as Fairpoint presently has," the Board said in a prepared statement.
The company would have to borrow $2.5 billion to complete the transaction, the debt service on which could exert "significant financial pressure" when combined with operating costs and revenue projections, the Board said.
But the regulators also said it could approve the merger, subject to a series of conditions, and invited FairPoint to submit revisions that addressed financial risks.
FairPoint wanted to take ownership of Verizon's 1.6 million access lines, along with Internet service, in northern New England. Verizon would have retained its wireless phone operations in the region.
Mike Spillane, business manager for the International Brotherhood of Electrical Workers Local 2326, which represents Verizon workers in Vermont and opposed the sale, said the union's concern with the proposal was the same as that of the Public Service Board.
"They did not have enough money to run the state as it should be run," Spillane said. "Where is it going to come from? The telecommunications world is wicked expensive."
Verizon's stock rose 38 cents, less than 1 percent, to $44.20 in trading Friday morning, while FairPoint's fell 96 cents, more than 6 percent, to $14.69.
