Windstream shakes free from Chapter 11 bankruptcy

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It's the dawning of a new era as Windstream Holdings emerges from Chapter 11 as a privately-held company. (Pixabay)

Windstream Holdings announced on Monday that it's now free from the shackles of Chapter 11 bankruptcy. Windstream has successfully shed more than $4 billion in debt and has approximately $2 billion in hand to fuel new growth as a privately-held company.

While Windstream was founded in 2006 as a traditional telco, it now it bills itself as a "software and communications company." To mark its transition, Windstream also unveiled a new logo on Monday.

Source: Windstream

“Today marks the start of a new era for Windstream as an even stronger, more competitive company,” said Tony Thomas, president and chief executive officer of Windstream, in a statement. “With the completion of our financial restructuring, we now have an enhanced balance sheet and a robust capital investment program to expand 1 Gig Internet service in rural America and maintain our product and software leadership in SD-WAN and UCaaS for enterprise customers. We are also pleased to continue our strategic partnership with Uniti Group and expand our mutually beneficial relationship. With the support of our new owners and current operational momentum, Windstream will continue advancing our long-term growth objectives while providing our customers with quality and reliable services.”

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Windstream 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.

Among the settlement terms in March, Uniti agreed to invest up to $1.75 billion in growth capital improvements, including "long-term fiber" and related assets in certain Windstream CLEC and ILEC properties over the initial term of the new leases.

Thomas previously said Windstream would use some of that investment to deliver 1 Gig internet speed to approximately half of its Kinetic broadband footprint that serves consumers and small businesses. Windstream also plans to deploy more fiber to enable the faster internet speeds

Along with announcing it had reached an agreement with Uniti, Windstream announced at the same time it had negotiated a proposal with hedge-fund manager Elliott and other investors to buy most of Windstream's equity out of bankruptcy while also removing a large chunk of its debt.

RELATED: Windstream's restructuring plan gets green light from judge as it targets late August to emerge from Chapter 11

In June, Judge Robert Drain, of the U.S. Bankruptcy Court for the Southern District of New York, confirmed Windstream's plan for reorganization. The reorganization plan allowed 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.

With Chapter 11 in its rear view mirror, Windstream will support its business and residential customers across three divisions: Windstream Enterprise, Kinetic by Windstream, and Windstream Wholesale.

 “I would like to thank our customers, vendors and business partners for their ongoing support throughout this process. I would also like to extend my deepest gratitude to the Windstream team for their dedication to our customers and continued commitment to delivering essential telecommunications services during this unprecedented healthcare crisis," Thomas said.

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