Windstream files for Chapter 11 protection

May 2019  |  DEALFRONT  |  BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

May 2019 Issue


In a move designed to secure the long-term financial stability of the company, Windstream Holdings, Inc. and all of its subsidiaries, including Windstream Services, LLC, have filed voluntary petitions for reorganisation under Chapter 11 of the US Bankruptcy Code.

Windstream intends to use the court-supervised process to address debt maturities that have been accelerated as a result of the February 2019 decision by Judge Jesse Furman in the Southern District of New York.

Judge Furman ruled that Windstream Services, LLC’s 2015 spinoff of certain telecommunications network assets into a real estate investment trust (REIT) violated its agreements with bondholders. The decision arose from challenges by Aurelius Capital Management and the US Bank National Association that the spinoff was invalid under the terms of those agreements.

As a result of the ruling, Windstream stock lost about 60 percent of its value.

“Following a comprehensive review of our options, including an appeal, the board of directors and management team determined that filing for voluntary Chapter 11 protection is a necessary step to address the financial impact of Judge Furman’s decision and its impact on consumers and businesses across the states in which we operate,” said Tony Thomas, president and chief executive officer of Windstream. “Taking this step will ensure that we have access to the capital and resources we need to continue building strong operational momentum, while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganisation.”

In conjunction with the filing, Windstream has filed a number of customary first day motions to allow it to continue to operate in the normal course of business without interruption or disruption to its relationships with its customers, vendors, channel partners and employees. Windstream expects to receive court approval for these requests and intends to pay vendors in full for all goods received and services provided.

In addition, Windstream has received a commitment from Citigroup Global Markets Inc. for $1bn in debtor-in-possession (DIP) financing. Following approval by the court, this financing, combined with access to the cash generated by its ongoing operations, will be available to meet Windstream’s operational needs and continue operating its business as usual.

“We acted decisively to secure the long-term financial stability of Windstream, and we are confident that, upon completion of the reorganisation process, we will be even better positioned to invest in our business, expand our speed and capabilities for our customers and compete for the long term,” added Mr Thomas.

A Fortune 500 company and a leading provider of advanced network communications and technology solutions, Windstream provides data networking, core transport, security, unified communications and managed services to mid-market, enterprise and wholesale customers across the US. The company also offers broadband, entertainment and security services for consumers and small and medium-sized businesses primarily in rural areas in 18 states.

Serving as legal counsel to Windstream is Kirkland & Ellis LLP. PJT Partners LP is serving as financial adviser and Alvarez & Marsal is serving as restructuring adviser.

Mr Thomas concluded: “I want to express my appreciation for the continued focus of the entire Windstream team as well as the loyalty and patience of our customers, vendors, channel partners and other stakeholders. With approval from the court, we will continue paying our employees, maintaining our relationships with our vendors and business partners and serving our customers as usual.”

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Fraser Tennant


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