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Windstream Restructuring Plan OKed, Bankruptcy Exit Expected in August

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Lit exit signs down hallway

Windstream‘s restructuring plan was approved Thursday and the communications giant expects to exit Chapter 11 bankruptcy in late August.

The U.S. Bankruptcy Court for the Southern District of New York has confirmed Windstream’s restructuring plan. Windstream will emerge from bankruptcy as a privately held company.

Windstream will reduce its debt by more than $4 billion or about two-thirds. It also will have access to about $2 billion in new capital to expand 1 gig internet service in rural America.

In addition, it will maintain its product and software “leadership” in SD-WAN and UCaaS for enterprise customers, the company said.

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

Windstream filed Chapter 11 bankruptcy last February.

‘Important Milestone’

Windstream's Tony Thomas

Windstream’s Tony Thomas

“We were able to reach this important milestone thanks to the support of our financial stakeholders, as well as our customers, vendors and business partners,” said Tony Thomas, Windstream’s president and CEO. “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. I want to thank the entire Windstream team for remaining focused on our customers and for tirelessly providing essential communications services during the reorganization process.”

Last month, a federal judge in New York approved Windstream’s proposed settlement with Uniti Group. Uniti spun off from Windstream in 2015 when the latter sold off some of its network assets. Uniti controls the broadband network that is critical to Windstream’s operations. Windstream supplies approximately 70% of Uniti’s revenue in exchange for access to the network.

“We look forward to beginning this new chapter for Windstream,” Thomas said. “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.”

Matt Milliron is head of strategic channels at Windstream Enterprise. He said over the past year partners have benefited from an enhanced go-to-market strategy, product and technological advancements, and expanded sales support through channel integration.

“[Thursday’s] ruling by the court allows us the flexibility to invest significant capital into our solutions and network,” he said. “We appreciate our partner’s loyalty and trust as we guide our customers’ transition to the cloud. Now more than ever, it’s a powerful time to be a partner with Windstream Enterprise as we accelerate our growth trajectory.”

Bankruptcy Not About Business Health

Omdia's Brian Washburn

Omdia’s Brian Washburn

Brian Washburn is an analyst with Omdia. He said Windstream’s bankruptcy was not about the health of the business itself.

“The company was forced to reorganize following a legal ruling that involved its unique operating structure with partner Uniti,” he said. “The company will emerge privately held, which resolves the issue. Windstream’s operations continued doing business as usual throughout the bankruptcy process. Of course in 2020, COVID-19 is affecting all businesses, but so far network operators are holding.”

Windstream’s operating structure was a unique example of commercial-led structural separation, Washburn said.

“This whole episode has a chilling effect on any other public U.S. network operators that might have even remotely considered some flavor of commercial structural separation,” he said.


5 comments

  1. Avatar Gary Amato July 11, 2020 @ 9:22 pm

    Does anyone even care that Windstream is reaping the benefits of a 4 billion dollar credit, monies rightfully belonging to the junior creditors and being rewarded to Windstream for covenant violations and improperly using monies not theirs for the spinoff.
    Why has that serious issue not even been discussed in this bankruptcy and why are they not being held accountable for what it has caused to countless other investors.
    One would think it would have been at the forefront of these proceedings.
    Funny how Judge Drain turns a blind eye on the real facts allowing them to be swept under the rug, seamlessly turning a blind eye to the real facts and how we ended up in bankruptcy based on an adverse ruling that would never have occurred if Windstream did not violate the bond covenants.
    What about Tony Thomas indicating that Windstream is financially strong and should not be in bankruptcy except for the adverse judgement and went further to say it was not operational or material failures that brought them here but then again on the other hand Thomas feelS compelled to except the 4 billion dollar credit cheating and ripping of the junior creditors.
    Would hope you or someone can find out the real truth concerning this fraudulent bankruptcy!

  2. Avatar Former Employee September 1, 2020 @ 6:06 am

    TT created the REIT that ultimately took WIN into bankruptcy. And since 2015 was at the helm as the stock went from around $50 into reverse splits etc. Stiffing creditors for poor practices, bad acquisitions over and over like Deltacom, is not a success story. All while being a top paid CEO. Employees and shareholders gouged but the BOD still allows him to be drunk at the wheel.

  3. Avatar Richard Archer September 24, 2020 @ 11:43 am

    What happens the stock holders of the company? Is their investment eliminated and do they have to suffer a complete loss or will they get reimbursed fully, partially or not at all. If this will be a private company it appears the current stock holders will eat the loss. Perhaps to an investor that owns the stock, could you kindly explain as I don’t understand having to suffer a complete loss of my investment. Thank you for shedding some light on this matter.

  4. Avatar Anthony Carter September 27, 2020 @ 1:09 pm

    This is an atrocity of business as usual. Windstream hasn’t been bankrupted in the statutes of a formal transformation of a company going bankrupt. In the definition the bankrupt company must close the doors. Sell off all assets to pay off the companies Dept’s. After all this is complete their is no more named company. Common stock share owners a left without. In this instince the preferred stock owners will reap the benefits of the company filing for protection under chapter 11. Windstream has continued profiting since filing for bankruptcy in 2019. Those stock purchasers that held faith in them as a common share holder in all faith expected windstream to come out of this sitiation better and stronger as the little company they are. What a disappoint they have become. This is the best bluff of all times. First their sued. They loose which they should have. Then they sue the company that they pay in promise to for the use of their fiber network that keeps Uniti making a profit off Windstream’s contractual agrenment year after year. Windstream wins this lawsuit which along with all their other profits while under protection of chapter 11 makes them enough profit not to close their doors. This game of smoke+mirrors has worked out well for the “financial” backers in windstream holdings+employees of winststeam unless they are common stock share holders in windstream with their 401k or 529 programs for profit sharing in the company they have invested their careers in. Please explain to me how windstream plans to legally compensate their employee for their loss. Are they to sit still and except the company using their profit sharing retirement funds to line their pockets and continue business as usual so they should be grateful to have a job. I’m sure the state of Georgia is happy that windstream come out of bankruptcy so the new call center continues to be built there. The rich get richer and those that get pushed aside get up and go to work just because that’s what we do. This is an atrocity that began when we put on the blinders of justice. Their is no justice when you work through the process of turning a loss into a win as the “financial” contributors have performed through our court system. Where +when will it stop. Take off the blinders.

  5. Avatar Jon Rosenblatt October 21, 2020 @ 12:25 pm

    Can I write off the purchase value of my WIN stock this calendar year ??

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