All divisions of Windstream have filed for bankruptcy protection this week.
“Windstream has received a commitment from Citigroup Global Markets Inc. for $1 billion in debtor-in-possession (“DIP”) financing. Following approval by the Court, this financing, combined with access to the cash generated by the Company’s ongoing operations, will be available to meet Windstream’s operational needs and continue operating its business as usual.” [PR]
Channel Partners are hopeful that commission payments don’t get touched.
This isn’t the first ILEC to go BK. Fairpoint did a pre-packaged BK in October of 2009. They emerged from BK January of 2011. Fairpoint’s trust then sued Verizon for $2B for a bad deal (2011). IN 2014, Verizon settled for $95M. In 2017, Fairpoint was acquired by Consolidated.
This is the only example we have of an ILEC going BK. Windstream is a complicated mess. It is an ILEC, a CLEC and a holding company and a REIT. The holding company owns the exclusive Master Lease Agreement with Uniti for the fiber and other assets transferred to Uniti (then called CS&L) in a REIT spin-off. This deal is what broke covenants in the bonds and accelerated the debt maturity after the court case between WIND and Aurelius.
The ILEC owns some copper and central offices but most of the assets were transferred to Uniti. The Holding company has the MLA, which is an asset. It will be interesting to see how the courts unravel this. It will take longer than Fairpoint did.
This was an inevitable move by WIND. They kept trying to buy their way out debt but lacked any strategic plan to do so. (Other than adding fees on top of fees to customers’ bills.)
Windstream set up a website to track status:
https://windstreamrestructuring.com
One question: How long does the $1B in financing last if they are taking out $400M on day 1?