The company may sell some small pieces of the ILEC to nearby, smaller independent telcos. For instance, Comporium might buy some Windstream assets in SC that would be a good geographic fit. They’d assume Windstream’s lease of those assets from Uniti. Uniti would be delighted to diversify away from one customer that controls 2/3 of its business. It raises some cash for creditors.
The bulk of the ILEC would kept independent in order to maximize the value of its tax loss carry forwards. The old shareholders would be wiped out. Senior secured creditors would get bonds. Junior secured creditors would get bonds and stock. Unsecured creditors would probably get mostly stock.
Unsecured bonds are trading at 10¢ to 15¢ on the dollar. That implies that financial markets believe that debt payments and profits over time from a future restructured Windstream (+ the value of any asset sales) will be worth billions — enough to cover all that secured debt at close to full value over time with a little bit still left for the unsecureds. That in turn suggests financial types don’t see Windstream (overall) getting liquidated.
Every dollar the company can trim from Uniti in lease payment reductions adds to the value for the creditors. Reportedly, “experts” think Uniti has a strong legal position but might offer some concession to avoid the uncertainties of a trial. (A lot of “experts“ thought Windstream had a strong case in the Aurelius trial.)
The new Windstream stock would start trading right away, as would bonds. Many involuntary holders (former creditors) would sell to new investors.
Elliott Management, as the largest creditor, would take the lead in restructuring the company to profitability.
Elliott is trying to force AT&T to stop buying businesses, downsize some and focus on its core businesses. I suspect that’ll be their theme at Uniti.
In another thread, someone said Windstream’s consultants (Alvarez and Marshall) were recommending something similar for Windstream.
I don’t fully understand the CLEC. It sounds like a mixed bag at best from other comments here. Some of it may be in a dead end business — renting other carriers’ facilities and reselling them. From others’ comments here, it sounds like there are a lot of unhappy CLEC customers — that’s a tough basis for a profitable business. Maybe some of the CLEC business would wind down? Are there attractive parts of the CLEC business that could be hived off for someone to buy?
(A lot of ILEC customers aren’t happy either but they have fewer alternatives)
I’ve read here that the ILEC uses some CLEC facilities- I reckon they would have to be retained.
I’m not clear as to whether Windstream is required to keep paying Uniti for stuff it stops using and doesn’t sell.
Any other ideas, observations?
I too would also like to hear some other views on this. In any case, @11Egliv2-1vhq ‘s view on this is something that is ont only possible but probable.