Well, it’s happened. Windstream Holdings today announced that it has filed for chapter 11 bankruptcy protection. Many saw this as inevitable following the recent court decision in favor of Aurelius for $310M in the wake of the company’s CS&L (now Uniti Group) spinoff back in the spring of 2015.
Windstream’s plan is to use the chapter 11 filing to reorganize its debt, specifically the debt accelerated by the court decision. The company remains committed to operating as usual, and has secured $1B of debtor-in-possession financing from Citigroup to tide it through the process.
The battle with Aurelius is not entirely over. Windstream also spent a few words criticizing Aurelius’s tactics and calling for regulators to look at ‘the ramifications of an unregulated credit default swap marketplace’. However, it’s not too early to say that the company’s decision to spin off its fiber and copper as a REIT back then was ill considered, since today’s filing can’t be called a positive thing.
What happens next is a bit of an open question though. Who will wind up owning the company in the end, and who will end up operating it? And will Uniti Group be drawn into the process explicitly, or just implicitly through its lease revenue from Windstream? Should be an interesting year…
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