1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Before the Public Utilities Commission of the State O
Total Page:16
File Type:pdf, Size:1020Kb
BEFORE THE PUBLIC UTILITIES COMMISSION 1 OF THE STATE OF CALIFORNIA 2 3 Application of Frontier Communications Corporation, Frontier California Inc. (U 1002 4 C), Citizens Telecommunications Company of A. 5 California Inc. (U 1024 C), Frontier Communications of the Southwest Inc. (U 1026 6 C), Frontier Communications Online and Long Distance Inc. (U 7167 C), Frontier 7 Communications of America, Inc. (U 5429 C) 8 For Determination That Corporate Restructuring Is Exempt From or Compliant With Public 9 Utilities Code Section 854. 10 APPLICATION OF 11 FRONTIER COMMUNICATIONS CORPORATION, 12 FRONTIER CALIFORNIA INC. (U 1002 C), CITIZENS TELECOMMUNICATIONS COMPANY OF CALIFORNIA INC. (U 1024 C), 13 FRONTIER COMMUNICATIONS OF THE SOUTHWEST INC. (U 1026 C), FRONTIER COMMUNICATIONS ONLINE AND LONG DISTANCE INC. (U 7167 C), 14 AND FRONTIER COMMUNICATIONS OF AMERICA, INC. (U 5429 C) 15 FOR DETERMINATION THAT CORPORATE RESTRUCTURING IS EXEMPT FROM OR COMPLIANT WITH PUBLIC UTILITIES CODE SECTION 854 16 [PUBLIC VERSION] 17 Charles Carrathers Mark P. Schreiber Associate General Counsel Patrick M. Rosvall 18 Frontier California, Inc. Sarah J. Banola 2560 Teller Road William F. Charley 19 Newbury Park, CA 91320 Aaron P. Shapiro Telephone: 805-375-4374 COOPER, WHITE & COOPER LLP 20 Fax: 805-498-5617 201 California Street, 17th Floor E-mail: [email protected] San Francisco, CA 94111 21 Phone: (415) 433-1900 Fax: (415) 433-5530 22 E-mail: [email protected] 23 Attorneys for Frontier Communications Corporation, Frontier California Inc., Citizens 24 Telecommunications Company of California 25 Inc., Frontier Communications of the Southwest Inc., Frontier Communications Online and Long 26 Distance Inc., and Frontier Communications of America, Inc. 27 May 22, 2020 28 1295108.1 TABLE OF CONTENTS 1 I. INTRODUCTION. ............................................................................................................ 1 2 II. SUMMARY OF REQUESTED RELIEF. ...................................................................... 4 3 III. APPLICANTS ................................................................................................................... 5 4 IV. FRONTIER’S CURRENT OPERATIONAL PLATFORM, FINANCIAL 5 CONDITION AND COMPETITIVE POSITION. ........................................................ 5 6 V. THE RESTRUCTURING SUPPORT AGREEMENT AND REORGANIZATION PLAN. ................................................................................................................................. 6 7 VI. ORGANIZATION AND OWNERSHIP UNDER THE RESTRUCTURING ............ 8 8 VII. DESCRIPTION OF THE CHAPTER 11 PROCEEDING. ........................................ 10 9 A. Events Leading to the Chapter 11 Filing .......................................................... 10 B. The Status of the Bankruptcy Proceeding ........................................................ 12 10 VIII. THE PUBLIC INTEREST SUPPORTS A WAIVER OF PRE-APPROVAL 11 REQUIREMENTS PURSUANT TO PUBLIC UTILITIES CODE SECTION 853(B). ........................................................................................................................................... 12 12 IX. THE REORGANIZATION MEETS THE TRANSFER OF CONTROL 13 REQUIREMENTS UNDER PUBLIC UTILITIES CODE SECTION 854(B). ........ 15 A. The Reorganization Will Provide Short-Term and Long-Term Economic 14 Benefits to Ratepayers (Public Utilities Code Section 854(b)(1)). ................... 15 B. No Specific Allocation of Benefits from the Reorganization is Required 15 Because Frontier’s Operating Companies are Not Subject to Rate Regulation in California (Public Utilities Code Section 854(b)(2)). ................................... 16 16 C. The Reorganization Will Not Adversely Impact Competition (Public Utilities Code Section 854(b)(3)). ...................................................................................... 17 17 1. The Reorganization Will Enhance Competition By Making the California Operating Subsidiaries Stronger Competitors. ................. 17 18 2. An Attorney General Opinion Regarding Competitive Impacts Is Not Needed And Should Be Waived Pursuant to Public Utilities Code 19 Section 853(b). .......................................................................................... 17 20 X. THE REORGANIZATION MEETS THE PUBLIC INTEREST STANDARD UNDER PUBLIC UTILITIES CODE 854(c). .............................................................. 18 21 A. The Reorganization Will Materially Improve Frontier’s Financial Condition (Public Utilities Code Section 854(c)(1)). ........................................................... 18 22 B. The Reorganization Will Give the Company an Improved Platform to Improve the Quality of Service to Ratepayers (Public Utilities Code Section 23 854(c)(2)). ............................................................................................................. 19 C. The Reorganization Will Maintain or Improve the Management of the 24 California Operating Subsidiaries (Public Utilities Code Section 854(c)(3)). 19 D. The Reorganization Will Be Fair to Employees (Public Utilities Code Section 25 854(c)(4)). ............................................................................................................. 20 E. The Reorganization Will Reach a Fair Result for Shareholders (Public 26 Utilities Code Section 854(c)(5)). ........................................................................ 20 F. The Reorganization Will Benefit State and Local Economies By Positioning 27 the Company to Invest More Extensively in its Network (Public Utilities Code Section 854(c)(6)). ................................................................................................ 20 28 COOPER, WHITE & COOPER LLP ATTORNEYS AT LAW 201 CALIFORNIA STREET 1295108.1 i SAN FRANCISCO, CA 94111-5002 1 G. The Reorganization Will Have No Impact on the Commission’s Jurisdiction (Public Utilities Code Section 854(c)(7)). ........................................................... 21 2 H. No Mitigation Measures Are Needed to Approve the Reorganization Because the Plan Already Embodies a Balanced Outcome That Will Promote the 3 Public Interest (Public Utilities Code Section 854(c)(8)). ................................ 21 4 XII. THE PRE-APPROVAL REQUIREMENTS OF PUBLIC UTILITIES CODE SECTIONS 851 ARE NOT TRIGGERED BECAUSE THE REORGANIZATION 5 DOES NOT CREATE A TRANSFER OF UTILITY ASSETS. ................................. 22 6 XIII. PROCEDURAL REQUIREMENTS ............................................................................ 22 A. Name and Address of Applicants (Rule 2.1(a)). ............................................... 22 7 B. Correspondence and Communications (Rule 2.1(b)). ...................................... 22 C. Proposed Categorization and Schedule (Rule 2.1(c)). ...................................... 22 8 1. Proposed Categorization. ........................................................................ 22 2. Need for Hearings. ................................................................................... 23 9 3. Issues. ........................................................................................................ 23 4. Proposed Schedule. .................................................................................. 23 10 D. Organization and Qualification to Transact Business (Rule 2.2). .................. 24 E. California Environmental Quality Act Compliance (Rule 2.4). ...................... 24 11 F. Character of Business (Rule 3.6(a)). .................................................................. 25 G. Description of Property Involved (Rule 3.6(b)). ............................................... 25 12 H. Terms and Conditions of the Reorganization (Rules 3.6(d), (f), and (g)). ...... 25 I. Financial Statement (Rule 3.6(e)). ..................................................................... 25 13 XIV. CONCLUSION. ............................................................................................................... 26 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 COOPER, WHITE & COOPER LLP ATTORNEYS AT LAW 201 CALIFORNIA STREET 1295108.1 ii SAN FRANCISCO, CA 94111-5002 1 I. INTRODUCTION. 2 Frontier Communications Corporation (“Frontier”) and its California local exchange and 3 long distance subsidiaries, Frontier California Inc. (U 1002 C) (“Frontier California”), Citizens 4 Telecommunications Company of California Inc. (U 1024 C) (“CTC California”), Frontier 5 Communications of the Southwest Inc. (U 1026 C) (“Frontier Southwest”),1 Frontier 6 Communications Online and Long Distance Inc. (U 7167 C) (“Frontier LD”), and Frontier 7 Communications of America, Inc. (U 5429 C) (“Frontier America”) (Frontier California, CTC 8 California, Frontier Southwest, Frontier America, collectively, the “California Operating 9 Subsidiaries,” and, together with Frontier, the “Applicants”)2 hereby submit this application 10 (this “Application”) pursuant to Public Utilities Code Sections 853(b) and 854 to address all 11 required regulatory approvals from the California Public Utilities Commission 12 (the “Commission”) in connection with the corporate restructuring associated with Frontier’s 13 chapter 11 cases (the “Chapter 11 Cases”).3 The Applicants seek a determination under Public 14 Utilities Code Section 853(b) that the restructuring merits an exemption from the transfer of 15 control requirements in Public Utilities Code Section 854. In the alternative, the Applicants 16 request the Commission’s approval pursuant to Section 854.4 17 To address