Windstream announced it's transferring about 14.7 million shares -- or about 50 percent of its total retained stock -- of Communications Sales & Leasing (CS&L) common stock to its creditors in order to help pay down debt.
The transferred CS&L shares will go toward retiring about $309 million in Windstream's revolving credit facility debt and satisfy transaction expenses. On top of that, the company has retired $126 million in face value of debt for $100 million in cash through open market debt repurchases since April. That adds up to a total debt reduction of about $335 million to date in the second quarter, according to Windstream.
"This transaction further optimizes our balance sheet," said Windstream CFO Bob Gunderman in a statement. "Through open market debt repurchases and the initial CS&L monetization, we expect to drive an incremental $25 million in cash interest savings in 2017 compared to our revised guidance for 2016."
After CS&L was spun off in April 2015, Windstream hung onto about 20 percent equity stake. After its new debt exchange deal, Windstream now holds about 14.7 million shares, or 10 percent, of CS&L, and only for the time being. Windstream said it plans to "dispose of the remaining shares in the future to further reduce debt and generate cash interest savings."
Windstream's debt reduction efforts come as the telecom is working to shore up its network and eliminate unnecessary third-party circuits with other carriers in order to streamline costs and focus on expanding its on-net footprint.
"The DS-3 displacement opportunity for us is really going into markets where we have redundant networks from legacy acquisitions and re-architecting how we're serving customers within those locations and driving out excess capacity of DS-3s and above," said Gunderman in a presentation at the Barclays 2016 High Yield Bond Conference. "If you have lots of capacity in one point of presence versus other places there's a lot of opportunity to reduce costs."
- read this press release
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