Uniti has come a long way since saying it might evict Windstream.

James Anderson, Senior News Editor

March 2, 2020

4 Min Read
Court financial settlement
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Windstream Holdings on Monday announced two key agreements that help it move closer to exiting chapter 11 bankruptcy.

The company announced a settlement with Uniti Group, to whom Windstream had owed a $650 million yearly lease for accessing network assets. Uniti will instead pay Windstream $490 million in cash, $40 million for particular Windstream fiber assets and $244.5 million in proceeds from selling Uniti stock to Windstream creditors. Uniti will also invest $1.75 billion in capital improvement for Windstream ILEC and CLEC properties over 10 years.

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Uniti’s Kenny Gunderman

Uniti president and CEO Kenny Gunderman said the “mutually beneficial outcome” gives Uniti 450,000 new fiber strand miles. The real estate investment trust (REIT) has 1.8 million fiber miles that it can lease to third parties.

“The agreement also provides further expansion in the coming years for additional fiber deployment with our commitment to invest up to $1.75 billion of capital in Uniti-owned, Windstream-leased assets,” Gunderman said. “Approximately 90% of our committed capital as part of the settlement agreement will be used to acquire or build new REIT eligible fiber assets with attractive yields.  We look forward to a strong working relationship with Windstream as we focus on enhancing Windstream’s competitive position and the network Windstream leases from Uniti.”

Uniti came into existence in 2015 when Windstream divested some of its network assets. Windstream last summer announced that it was trying to negotiate a smaller price for using the Uniti network and even re-characterize the leasing agreement into a financing agreement. Uniti executives appeared to initially the reject the notion of using a mediator and shrinking the leasing fee, and they even suggested that they might evict Windstream from their network should the latter fail to make its payments.

We learned last month that both  would head to court if they couldn’t reach a settlement through mediation The trial would have started March 3.

Bloomberg’s Allison McNeely reports that Uniti originally offered Windstream $100 million in cash last fall.

Windstream also on Monday announced that its first lien creditors have agreed to its financial restructuring plan. The plan is said to reduce Windstream’s debt by $4 billion.

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Windstream’s Tony Thomas

“We are pleased to have reached an agreement with creditors on the terms of a comprehensive financial restructuring that will significantly reduce our debt and strengthen our long-term competitive position,” Windstream president and CEO Tony Thomas said. “This agreement demonstrates our creditors’ confidence in our go-forward business plan and will enable Windstream to work through the financial restructuring process on an expedited basis.”

Matt Milliron, head of strategic channels and channel Chief at Windstream Enterprise, praised the agreements in a statement.

”These agreements bolster our statements that we have been communicating to our partners for the past year, specifically that we will be a stronger business with increased opportunities for our partners to sell transformative solutions in the marketplace today,” Milliron said. “In the past year we have won prestigious awards for our solutions, launched Channel Integration and are about to unveil our brand new WE Connect Partner Portal. As we focus forward, and near emerging from restructuring, we look to continue to build on our strong program by relentlessly pursuing and concentrating on both the customer and partner experiences. Together with our partners we will achieve more.”

Check out the settlement filing and the 8-K filing with the Securities and Exchange Commision.

 

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About the Author(s)

James Anderson

Senior News Editor, Channel Futures

James Anderson is a news editor for Channel Futures. He interned with Informa while working toward his degree in journalism from Arizona State University, then joined the company after graduating. He writes about SD-WAN, telecom and cablecos, technology services distributors and carriers. He has served as a moderator for multiple panels at Channel Partners events.

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