Windstream Follows Through, Creates New Holding Company

Windstream Corp. of Little Rock followed through Friday on an idea floated earlier this month by forming a new publicly traded parent company, Windstream Holdings Inc.

The new company will become the parent of Windstream Corp. and its subsidiaries. It will begin trading on the Nasdaq Stock Exchange on Tuesday, after the Labor Day break, under Windstream's existing ticker symbol, WIN.

"The new ownership design will enhance Windstream’s corporate structure and provide greater financial and strategic flexibility in the future. In addition, the new structure mirrors that of other companies in the telecommunications industry," the company said in its announcement, language almost identical to that used when the idea was first made public on Aug. 8.

Donna Jaegers, an analyst covering Windstream for D.A. Davidson of Great Falls, Mont., said the manuever could make Windstream more nimble.

"It gives them a little bit more flexibility to possibly float more debt if they're looking at any sort of M&A transactions," she told Arkansas Business on Friday. "It is a fairly common structure in the industry, and usually sort of at the holding company level you can do maybe debt with a little more leverage on it than at the operating company's level."

Analyst Barry McCarver of Stephens Inc. in Little Rock agreed, saying the new corporate structure was "not unusual" and would make it easier for Windstream to refinance existing debt or to issue new debt for potential acquisitions.

"Essentially by creating a holding company, that will mirror several other telecommunications companies so they'll look similar to some of the other big guys," McCarver said. "It's totally a nonevent for shareholders. Windstream refinances debt on a pretty regular basis. … By forming a holding company it makes it easier to make acquisitions, it makes it easier to refinance debt because instead of refinancing debt under the subsidiary they're acquiring, they're refinancing debt at the holding company level."

Effective at 3 p.m. Central Time, existing shares of common stock of Windstream Corp. will automatically convert into equivalent shares of Windstream Holdings Inc. stock, the company said. Windstream stock closed at $8.01 on Thursday, near the low end of its 52-week range of $7.50 to $11.04.