Windstream, Uniti Reach an Agreement in Principle

Sanity seems to have prevailed over in the negotiations between Windstream and Unity. Following the court win by Aurelius and Windstream’s resulting trip into chapter 11 bankruptcy, the terms of the spinoff and lease agreement that created Uniti came under heavy fire. But a path to peace may now be in place.

The settlement terms are complex, but here’s a quick gist:

• Uniti will buy some fiber & IRU contracts from Windstream for $40M.
• Windstream will transfer some other IRU contracts and give up rights to a pile of related or underutilized fiber to Uniti
• The existing lease will be split into ILEC and CLEC agreements with the same total annual rent initially.
• Uniti will invest up to $1.75B in capex on fiber and such in Windstream’s territories, and in CLEC territories they’ll have the option to fund 50% of fiber builds while retaining excess fiber for themselves.
• Uniti will pay Windstream $400M over the next 5 years with 9% interest.
• Uniti will sell Windstream’s creditors 38.6M shares of stock at $6.33 per share, and will pay the proceeds to Windstream.

I don’t pretend to understand what that will mean going forward just yet, it’s too soon.  But the end result seems likely to leave both parties with a reasonable path forward.  The alternative to finding a deal wasn’t looking so pleasant, so this is probably a good ending — assuming of course that it gets approved by the necessary parties.

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Categories: CLEC · Fiber Networks · Financials · ILECs, PTTs