Windstream Holdings Inc. of Little Rock, Arkansas, a firm that provides data networking and broadband servings in rural areas of 18 states says it anticipates exiting bankruptcy in August.
The company announced late Thursday that the U.S. Bankruptcy Court for the Southern District of New York has approved its reorganization plan, which, when completed, will leave Arkansas with one fewer public company.
After hearing testimony for close to two days, Judge Robert Drain confirmed Windstream’s plan for reorganization. Windstream expects to complete the financial restructuring process and then emerge as a privately-held company in late August.
The company’s reorganization plan allows Windstream to trim its debt by more than $4 billion and reorganize its governance, which includes naming some of its creditors to seats on the company’s new board of directors. The reorganization plan eliminated junior bondholders who were owed close to $2.4 billion, converted some senior debt to equity and made Elliott Management Windstream’s largest shareholder, reported Fierce Telecom.
The company expects to emerge in late August from the Chapter 11 bankruptcy it’s been working through since February 2019. It will do so with $4 billion less in debt (a two-thirds reduction) and with access to approximately $2 billion in new capital. That capital will be used to expand its 1-gigabit-per-second internet service in rural America and keep its existing products and software for enterprise customers competitive.
“We were able to reach this important milestone thanks to the support of our financial stakeholders, as well as our customers, vendors and business partners,” said Windstream Holdings CEO and President Tony Thomas, in a prepared statement. “The court’s confirmation of our plan puts us on a definitive path to emerge from restructuring with a stronger balance sheet and healthy liquidity position to continue making network and software investments for the benefit of our customers.”
“When we emerge, our lenders will become our new owners and strategic partners and are aligned with our long-term strategy and mission to deliver quality and reliable services. As a private company, Windstream will have increased flexibility to invest in our network, accelerate our transformation and return to growth. Together, we will emerge from this process as a stronger company able to successfully compete in the communications marketplace.”
It has been a long, and sometimes bitter, road to the end of Chapter 11 bankruptcy for Windstream. It has operated under the cloud of Chapter 11 bankruptcy since February of last year after it lost a legal battle with New York hedge fund Aurelius Capital Management over whether Windstream had defaulted on bonds by spinning off the Uniti Group four years ago.
As part of that spinoff, Windstream transferred copper-based network assets to Uniti, which Windstream leased back from Uniti to serve its 1.4 million residential and business customers across its 18-state footprint. Windstream was paying $54 million per month to Uniti for access to Uniti’s network assets.
The master lease with Uniti was set to expire in 2030, and had an annual rent of approximately $659 million. Windstream filed a complaint against Uniti on July 25 that sought to re-characterize its relationship with Uniti from a lease to a financing arrangement.
For months, Windstream and Uniti couldn’t come to an agreement on the terms of the master lease and were headed to a court date earlier this year before agreeing to new terms in early March. Windstream’s plan for ditching Chapter 11 received a boost in May when Judge Drain approved Windstream’s settlement agreement with Uniti Group.
Source: Fierce Telecom
