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ISP Windstream Files For Chapter 11 Bankruptcy After Being Hit With $310 Million Judgement (arkansasbusiness.com)
bbsguru writes: Windstream Holdings Inc. of Arkansas filed for Chapter 11 bankruptcy on Monday, less than two weeks after a federal court judge found that the 2015 spinoff of its fiber and copper assets into a separate company ran afoul of bond covenants, exposing the company to a $310 million judgment. Windstream, a spinoff of the old Alltel Corp. of Arkansas, reported $5.8 billion in revenue in 2017. It employs about 13,000 companywide. CEO Tony Thomas said in a press release that the reorganization is "a necessary step to address the financial impact" of the judge's decision and "the impact it would have on consumers and businesses across the states in which we operate."
"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," Thomas said. "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." A court approval of a reorganization plan will allow the company to continue paying its employees and maintain relationships with vendors, business partners and customers, Thomas said.
"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," Thomas said. "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." A court approval of a reorganization plan will allow the company to continue paying its employees and maintain relationships with vendors, business partners and customers, Thomas said.
"Taking this proactive step will ensure that Windstream has access to the capital and resources we need by sticking it to bondholders inspite of the federal judgment."
Chapter 11 in this case is simply an appeal of the decision they can't lose.
They were caught doing shady things, and so to avoid the consequences they'll just declare bankruptcy? Hopefully the new judge will be a little skeptical of this.
I don't know, but it works for me.
Yeah limping away to prepare his golden parachute.
Common practice to bundle up a bunch of your marginal businesses, spin them off, they break even more or less for a few years, burn through their credit lines and then go into bankruptcy when the first large round of debt is due.
Article summary should read:
Windstream, a marginal business spun off from Allitel, limped along for a few and then slipped into bankruptcy.
Simply look at the financials and you'll see they have owed > 4 billion in debt since being spun off.
Check the bond ratings and the spread of bonds traded vs us treasuries to see how risky the bond market gauges the company.
Not really a surprise the bankruptcy.
This will probably result in customer service for Windstream customers getting worse--and it is already bad.
I used to work for Alltel, years and years ago before they got bought by Verizon.
So was CEO Tony Thomas the CEO back in 2015? If so, why is he still there? Or why is the legal team responsible for this still there? Or have they all already "done their duty" and left to spread More Joy and Happiness wherever they go?
If the universe is someone's simulation -- does that mean the stars are just stuck pixels?
The hedge fund looked for bonds where they thought there was a violation of the bond issuing covenant. The judge ruled that there was, that the activities by the parent company violated the bonds' agreement against a sale & leaseback arrangement.
Hmmm, not much needs to be said other then: "legacy rural telecom provider Windstream Holdings, Inc.". While is is true that they have made some investments in "high speed networking", the reality is that the bulk of the coverage map is in providing rural landline services. The epitome of the buggy whip business in the 21st century -- which no doubt was the inspiration (or desperation) for their shenanigans. I'm still not sure my these rural landline telco's think that there is good business to be had in buying assets similar to their already dismal and no future assets. Maybe they are practicing the CA (Computer Associates) model of business except applied to telecommunications -- i.e. but up assets on the decline, cut the support costs, maintenance, help desk, etc. and milk the declining install base while you look for another set of distressed assets to show up in the M&A trough.
Alltel bought, stripped and dumped a company called Systematics back in the 90's. Mostly because they were desperate to get a grip on the then new booming cell phone market and had no real system capable of handling the tracking and billing. Buying a company that did contract services for banks was the closest they could get. It worked. They got a billing system created, spun off some healthcare software and screwed the employees by selling the rest over to Fiserv. Much $$$ for the board. They later went private, spun the legacy deadweight landlines off into Windstream and then screwed over some more folks by selling to Verizon wireless. And yet again more $$$ for the board w no regard for the viability of the surviving bad smell that was left of the firm. That Windstream still existed was surprising.