JANA Partners, Ares, and Cerberus – What's going on at Frontier Communications (FYBR)?

bump!

Been an interesting one for sure.  Ares was also a bondholder and built an equity position via the restructuring (which they are adding to slightly as they probably felt the shares were undervalued in the teens)... a good chunk of their position is in their special situations strategy (the balance in their buyout strategy) and I would be surprised if either of them looked at this from a take-private angle (buyouts doesn't have the capital and won't do a minority deal where they are <25%, special sits hasn't really done take-privates). 

As far as the other guys go, I'm not sure what their intentions are, it's possible that a consortium could come in and put an offer on the table if they deem the company remains significantly undervalued in public markets and there's more value to be unlocked if the company is private for a few years (although the stock is up 60% from lows this summer and close to the Rx value from early 2021).

I personally wouldn't characterize it as PE firms building big stakes to position themselves for a take-private, it's more funds that were influential in the restructuring holding onto their stakes / adding slightly because they believe the company is undervalued currently and a few of the more opportunistic hedge funds piling in when the shares tanked earlier this year. 

Jana will push for a sale of the company because that's what activists do, but I wouldn't bank on that being the outcome of their campaign... it's just the "cleanest" / easiest way to realize value uplift if someone is willing to post a price say 30% above current levels vs. having to bank on the market giving credit for the other value creation strategies Jana outlined (divestitures, JVs, etc.).  Just my 2c, curious if others have a different perspective.

Excerpt from Jana's letter to my point above: "We believe Frontier's failed tenure in the public markets stems in part from its inability to attract new investor interest. Despite exiting bankruptcy more than two years ago, Frontier continues to be held largely by the same credit funds it emerged with post restructuring. In fact, since the beginning of 2022, Frontier has managed to attract only two new top 20 shareholders other than JANA Partners".