An investor in Charlotte-based FairPoint Communications is suggesting the company consider selling itself, among other options, saying FairPoint has failed to maximize shareholder value.
New York-based Maglan Capital, which owns about 7.5 percent of FairPoint’s outstanding shares, said in a letter to FairPoint’s board of directors Monday that there is a “serious discrepancy between FairPoint’s improved balance-sheet, operating performance and prospects” and its current market valuation.
“We suspect that our concerns are shared by a number of other large shareholders, and are of the impression that there has been little action taken, despite these concerns having been voiced directly to members of the board previously,” Maglan said in the letter.
A representative of FairPoint could not be reached for comment.
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FairPoint’s shares on Monday closed up nearly 3 percent at $13.59, putting the company’s total market value at $364.8 million.
FairPoint provides phone and Internet service in northern New England. Maglan has been an investor in Fairpoint since its 2009 bankruptcy filing.
In October of that year, FairPoint filed for Chapter 11 bankruptcy protection after struggling to pay down debt from landline phone assets acquired from Verizon Communications in March 2008.
Steven Azarbad, chief investment officer at Maglan, told the Observer that the hedge fund has recently voiced its concerns about FairPoint privately, but now “it’s time to push them publicly.”
Maglan said the ways in which FairPoint could improve shareholder value include, in order of priority, a sale of the company, implementing a recurring dividend to shareholders, developing a share repurchase program, retiring outstanding debt and refinancing outstanding debt.