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Windstream Bankruptcy: Chapter 11 Filing Status Updates, Revenues

Windstream Holdings, the embattled IT services provider, is navigating a Chapter 11 bankruptcy filing. Here’s a timeline of the case, including Q4 2018 earnings announced on March 15, 2019.

Ongoing Updates: This story was originally published on February 15, 2019. The latest updates were made on May 13, 2019.

Windstream is a provider of network communications and IT services for consumers, small businesses, enterprise organizations and carrier partners across the United States. The company offers broadband, security solutions, voice and digital TV, data, cloud solutions, unified communications and managed services. The company’s fiber optic network spans 125,000 miles.

Windstream Bankruptcy Timeline & Status

Tony Thomas

February 15, 2019: Windstream loses court ruling vs. Aurelius Capital Management. The case involves a Windstream sale-leaseback that broke promises to leaseholders, Aurelius alleges. The legal case loss triggers a financial crisis at Windstream and the company’s stock suffers a double-digit percentage decline,

In a prepared statement about the court ruling, Windstream President and CEO Tony Thomas said:

“We are disappointed in, and frankly surprised by, the ruling and will be taking immediate steps to pursue all available options, including post-trial motions and an appeal. Additionally, we will work with our creditors on the next course of action. Windstream provides critical voice and data services to customers across the U.S. We remain committed to serving them and ensuring they realize the maximum benefit in transitioning to next-generation technology solutions and premium broadband services.”

February 18, 2019: Windstream postpones the release of the company’s fourth-quarter and full-year 2018 financial results amid the court ruling. The earnings release had been scheduled for February 21. The results will now be released no later than March 18, the company says.

February 19, 2019: Aurelius Capital offered a sharp counter-statement:

“We take no pleasure in Windstream’s resulting financial predicament.  Windstream could easily have averted it – first by not playing fast and loose with its noteholders in 2015, hoping nobody would hold the company to account, and second by settling.  Instead, Windstream wasted an exorbitant amount – more than would have been needed to settle with us at the time – on an ineffective exchange offer and then on litigation.

Windstream’s Chapter 11 Bankruptcy Filing

February 25, 2019: Windstream files voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in a U.S. Bankruptcy Court. In a prepared statement, Thomas says:

 “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.

Assuming approval from the court, the company intends to:

  • continue paying employees;
  • maintaining relationships with vendors and business partners; and
  • serving customers as usual.

On the financial front:

  • Windstream has received a commitment from Citigroup Global Markets Inc. for $1 billion in debtor-in-possession (“DIP”) financing.
  • That financing, pending court approval, combined with access to the cash generated by the company’s ongoing operations, will be available to meet Windstream’s operational needs and continue operating its business as usual, the company says.

Windstream Court Approval, Stock Delisting

February 26, 2019: The U.S. Bankruptcy Court grants Windstream interim approval to access up to $400 million of its $1 billion in debtor-in-possession (“DIP”) financing. This financing, combined with access to the cash generated by the Company’s ongoing operations, is available to meet Windstream’s operational needs and continue operating its business as usual, the company says.

Windstream also received Court approval to operate in the normal course of business without interruption or disruption to its relationships with its customers, vendors, channel partners and employees, the company says.

Windstream will pay vendors in full for all goods received and services provided to the Company after the filing date, February 25, 2019, the company adds.

March 6: Windstream delisted from Nasdaq. Now trades via OTCPK:WINMQ.

WindStream Creditors

March 13: Windstream unsecured creditors list includes:

  • Federal Pension Benefit Guaranty Corp.
  • Communications Workers of America
  • AT&T
  • VeloCloud Networks
  • Crown Castle Fiber
  • LEC Services
  • UMB Bank

Source: SeekingAlpha referencing Bloomberg. We have not seen the original Bloomberg coverage.

Windstream Financial Results

March 15, 2019: The company announced Q4 and full-year 2018 results. Among the key data points:

  • Total revenue was $1.39 billion for Q4 2018, down from $1.5 billion in Q4 2017.
  • Net loss was $549.2 million in Q4 2018, smaller than the $1.8 billion net loss from Q4 2017.
  • The company claims to be the largest provider of SD-WAN services in the United States, with more than 1,800 customers in over 15,000 locations nationwide and growing.

In the earnings release, CEO Tony Thomas expressed optimism about the company’s long-term business prospects, stating:

“We are confident we will emerge from the financial restructuring process as a healthier and even stronger company than we are today, and we are excited about the opportunities that lie ahead.”

Still, the earnings release contained a lengthy list of warnings about the company’s long-term prospects — most of which involved the recent Chapter 11 filing.

May 15, 2019: Windstream is expected to announce Q1 2019 financial results on May 15.

Ongoing updates

Windstream has set up this restructuring website to help investors, customers and partners track updates.

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5 Comments

Comments

    Peter Radizeski:

    How long will that $1B last if they are taking $400M out on day 1?

    Joe Panettieri:

    Peter: We’ll continue to track the story and the financial figures daily.
    -jp

    Mark:

    Where does this leave the Company financially and what does it mean for the outlook of the Company to stay in business?

    Peter Radizeski:

    Windstream needs a strategy. The debt was an obstacle they played a number of games to get around. Now they are basically every other CLEC selling UCaaS and SD-WAN — and have a service delivery problem to boot. It is a three pronged problem – financial, marketing and ops (service delivery). Fairpoint was in BK for 2 years. This will take longer. More moving parts.

    Joe Panettieri:

    Peter: Thanks for taking the time to post your perspective without simply lobbing bombs at Windstream. I think your analysis/summary is on the mark, and we’ll continue to monitor the situation closely. PS: Even if I disagreed with your thoughts I appreciate that you posted them in a professional tone.
    -jp

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