Update: Court Approves Windstream's Path Out of Bankruptcy as Private Company

Update: Court Approves Windstream's Path Out of Bankruptcy as Private Company
Windstream President and CEO Tony Thomas (Kerry Prichard)

Windstream Holdings Inc. of Little Rock 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.

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 about $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. 

Windstream said it will refocus its allocation of resources on growing the business and better positioning itself for the long term.

“We look forward to beginning this new chapter for Windstream,” President and CEO Tony Thomas said in a news release. “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.”

He also said, “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.”

Brad Hedrick, president of Windstream operations in Arkansas, told Arkansas Business that Windstream will emerge from bankruptcy an “incredibly strong company” and that it is transforming from a landline telephone and infrastructure company into a technology company and software powerhouse. 

For example, Windstream offers a software defined wide area network, which allows all of an organization’s locations to be connected together efficiently and control the prioritization of video traffic, internet traffic, voice traffic and internal data network traffic. The company also offers unified communications as a service (UCaas), a cloud-based platform that replaces traditional business telephone systems.

Right now through late August, Windstream will be working to get final regulatory approvals, Hedrick said. For customers and employees, the restructuring process will be “business as usual,” he said.

There will be five or six new owners, but the company declined to disclose who those owners will be, citing that an official announcement will be made at a later date. The Wall Street Journal reported that Elliott Management Corp. and other senior creditors will be in control of the business under the reorganization plan.

Windstream stock will be canceled when the company completes the restructuring, Hedrick added. As a private company, the reduced reporting requirements will allow decisions to be made and executed more quickly, he said.

Thomas, the CEO, said Windstream was “able to reach this important milestone thanks to the support of our financial stakeholders, as well as our customers, vendors and business partners.” Hedrick agreed that the restructuring plan was a “collaborative” effort.

The bankruptcy was triggered by a federal court judge's ruling that the 2015 spinoff of Windstream's fiber and copper assets into publicly traded Uniti Group Inc. ran afoul of bond covenants. The ruling came in a lawsuit brought by Aurelius Capital Management of New York, and it exposed Windstream, which had already reported losses for several previous quarters, to a $310 million judgment.

Windstream pays Uniti for access to telecommunications infrastructure and other assets that power its business. U.S. Bankruptcy Court Judge Robert Drain approved a lease settlement agreement between the two companies in May.

Kenny Gunderman, president and CEO of Uniti, issued the following statement on Friday: “We are pleased that the court has approved Windstream’s plan of reorganization. We expect Windstream will emerge from bankruptcy later this year with a significantly improved financial position, resulting in a stronger and healthier tenant. Our settlement agreement with Windstream adds significant strategic value for Uniti as it further expands and enhances the value of our national network, strengthens Windstream’s competitive position, and provides Uniti a clear path forward."

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