Windstream Holdings, Inc. (NASDAQ: WIN) and its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The company took the action after it lost a court case earlier this month that had the attendant consequences of accelerating debt maturities. Windstream says it has received a commitment for $1 billion in debtor-in-possession (DIP) financing which, with the revenues from continuing operations, will keep the company going as the bankruptcy process sorts itself out.
Earlier this month, Judge Jesse Furman of the Southern District of New York ruled in favor of a suit filed by Aurelius Capital Management and U.S. Bank National Association that Windstream Services, LLC’s 2015 spinoff of certain telecommunications network assets into a real estate investment trust (REIT) violated its agreements with bondholders (see "Windstream plans REIT to own fiber and copper networks"). The ruling set in motion a series of events of default and/or cross-defaults with several Windstream debt obligations and credit agreements.
“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 the impact it would have on consumers and businesses across the states in which we operate,” said Tony Thomas, president and CEO of Windstream. “Taking this proactive step will ensure that Windstream has access to the capital and resources we need to continue building on Windstream’s strong operational momentum while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganization. We acted decisively to secure the long-term financial stability of Windstream, and we are confident that, upon completion of the reorganization 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.
Windstream says that Citigroup Global Markets Inc. has committed to supply $1 billion in DIP financing to keep the company going. The court must approve this arrangement; if this approval is granted, Windstream says the funding and revenues from ongoing operations will keep the company “operating its business as usual.”
“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,” explained Thomas. “We remain committed to providing critical voice and data services and ensuring customers realize the maximum benefit in transitioning to next-generation technology solutions and premium broadband services.”
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