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July 8, 2019
Windstream makes monthly rent payments to Uniti, a real estate investment trust (REIT), under a master lease in exchange for access to Uniti’s network, which Windstream uses to serve its customers. The Windstream-Uniti master lease agreement is set to expire in 2030.
UMB Bank and U.S. Bank filed a motion asking the U.S. Bankruptcy Court for the Southern District of New York to order Windstream to stop making Uniti lease payments. The banks said the payments are part of a financing arrangement, as opposed to lease arrangements, and financing arrangements are prohibited under bankruptcy proceedings.
Windstream filed for chapter 11 after losing its court battle against Aurelius Capital Management, a Windstream bondholder that claimed breach of contract.
Windstream’s Scott Morris
“We have made substantial progress since voluntarily filing for reorganization in late February and continue to work toward completing the process as expeditiously as possible,” said Scott Morris, Windstream spokesman.
Windstream filed a preliminary objection to the creditor’s motion, saying it is “both procedurally and substantively improper.” It’s an attempt to “end-run well-established procedures meant to protect a chapter 11 debtor’s right to control claims and causes of action of its estate,” according to Windstream.
Kenny Gunderman, Uniti’s president and CEO, said the REIT’s relationship with Windstream “is simple: Uniti owns the network that Windstream uses to service its customers, and Windstream must continue to pay rent in order to maintain access to the network — otherwise it will not be able to operate its business.”
“This latest effort by out-of-the money junior creditors of Windstream to extract value from Uniti does nothing to change that essential fact,” he said. “Consistent with the views of Windstream’s counsel and advisers when the lease was established, we believe that the lease is a true lease and will be respected and enforced as such, and we will vigorously contest any argument to the contrary. As we have repeatedly said, we intend to be long-term partners for Windstream and we remain open to working with Windstream and its constituents on mutually beneficial modifications to the lease.”
As of March, Uniti owned 5.6 million fiber strand miles, about 500 wireless towers and other communications real estate throughout the United States. Uniti formed from Windstream’s tax-free spinoff of select telecommunications network assets in 2015.
Read more about:Agents
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