For those expecting a quick resolution to the ongoing dispute between Windstream (and its creditors) and Uniti Group, yesterday was a bit of a setback. Ok, well I doubt few were expecting a ‘quick resolution’, but hey. The mediation process the two were undergoing has been suspended, as the parties have apparently reached an impasse.
In an announcement yesterday, Windstream released a set of ‘cleansing materials’, which basically boils down to summaries of the current proposals by both sides. Both envision Uniti paying Windstream a lump sum up front, but as you might imagine the numbers are pretty far apart. Both envision a substantial fiber and fixed wireless investment commitment on the part of Uniti over the next 10 years of about $1.75B, but there are big differences in the expectation of rate of return on those investments. And both envision Uniti coming away with additional dark fiber IRUs on the assets Windstream currently leases exclusively. Interestingly, nobody seems to be focusing on reducing rent on the existing assets.
Of course, we all knew hardball was going to be played here on the part of Windstream’s bondholders. They, after all, brought about the whole chapter 11 process when Aurelius won that judgement in court against Windstream over the original spinoff of the assets. That being said, there is an element of mutually assured destruction here in the event that the two companies can’t reach a useful agreement.
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