Thread regarding Windstream Corp. layoffs

Aurelius is back and they're betting on Uniti.

Based on public Form 13F-HR filings to the SEC, they held 280,000 shares of Uniti on 6-30.

By 9-30, they'd doubled their stake to 566,199 shares

This is not a big stake for them or Uniti seeing that Uniti has a little under 200 million shares outstanding.

Still kind of interesting.

Uniti’s stock price is up almost 20% since the announcement this week.

Windstream’s unsecured bonds are down 25% to 13¢ on the dollar.

Wall Street’s sees the announcement and the accompanying “cleansing materials “ as positive for Uniti, negative for Windstream

I recommend this discussion among Uniti investors about the 2 companies' legal strategies and financial outlooks:
https://seekingalpha.com/article/4306296-uniti-update-mediation-impasse-effect-shareholders

Be sure to skim the comments at the bottom of the article as investors and naysayers argue.

There are some REIT-specific terms like AFFO that I had to look up on Wikipedia.

For those expecting a quick resolution to the ongoing dispute between Windstream (and its creditors) and Uniti Group, yesterday was a bit of a setback. Ok, well I doubt few were expecting a 'quick resolution', but hey. The mediation process the two were undergoing has been suspended, as the parties have apparently reached an impasse.

In an announcement yesterday, Windstream released a set of 'cleansing materials', which basically boils down to summaries of the current proposals by both sides. Both envision Uniti paying Windstream a lump sum up front, but as you might imagine the numbers are pretty far apart. Both envision a substantial fiber and fixed wireless investment commitment on the part of Uniti over the next 10 years of about $1.75B, but there are big differences in the expectation of rate of return on those investments. And both envision Uniti coming away with additional dark fiber IRUs on the assets Windstream currently leases exclusively. Interestingly, nobody seems to be focusing on reducing rent on the existing assets.

Of course, we all knew hardball was going to be played here on the part of Windstream's bondholders. They, after all, brought about the whole chapter 11 process when Aurelius won that judgement in court against Windstream over the original spinoff of the assets. That being said, there is an element of mutually assured destruction here in the event that the two companies can't reach a useful agreement.

Wall Street's take on the mediation breakdown:

Windstream's unsecured bonds dropped 16%. They're now 14¢ on the dollar.

The unsecured creditors are more pessimistic after the announcement.

Uniti's stock dropped then came back to a little above (4%) where it was earlier.

Good layman's summary:

https://www.nwaonline.com/news/2019/nov/13/2-firms-talks-fail-to-solve-dispute-201/

This means layoffs and auctions.

There are upcoming hearings on this lease later this month. I wonder if any of the key executives from Uniti or Windstream will have to testify under oath?

Uniti released something similar:
https://investor.uniti.com/static-files/9599076f-b7da-4982-8dd0-ec5bfb6b9222

Based on the article at https://talkbusiness.net/2019/11/windstream-uniti-mediation-talks-fails-headed-to-court-in-march:

Windstream and its unsecured creditors wanted a package of cash and Uniti stock from Uniti worth about $745 million.

Uniti in return offered to give Windstream $100 million in cash.

For comparison, Uniti's value is about $1.2 billion, if you bought up all its stock at today's price.

The ongoing lease terms were also very far apart; I'm still trying to sort them out.

Good summary at https://talkbusiness.net/2019/11/windstream-uniti-mediation-talks-fails-headed-to-court-in-march/ :

"In today’s filing concerning the failed talks, Windstream’s proposed settlement terms show that the parties were far apart. Windstream’s offer included a cash consideration of $525 million and a stake in Uniti equal to 19.99% of the real estate trust’s current shares outstanding, among other considerations. The terms also included a substantial $1.75 billion upgrade through April 2030 by Uniti in its aging fiber network."

"Uniti’s counterproposal offered a similar network upgrade as Windstream, but provided no equity stake to its former parent company more than four years after the Arkansas companies first split apart. Uniti’s proposed terms, however, included only a $100 million cash consideration that would also keep the current “rent escalator” payments by Windstream in place. Both proposed deals also included asset purchases and contract transfers that were beneficial to the future growth of both parties."

Based on its stock price today, that 20% stake in Uniti would be worth about $220 million.

"It was sort of terse."

As in, Exhibits A and B with all the numbers were unclear to me.

"I believe it essentially means that all of the behind the scenes proposals ... now freely available to the public"

I got that part of it – I just had difficulty understanding what Windstream was proposing to Uniti and vice versa. It was sort of terse.

I believe it essentially means that all of the behind the scenes proposals, documents, numbers, etc. being used by involved parties to come to a resolution are now freely available to the public.

I didn't understand what I was looking at. Seemed to miss some context.

Interest in others' explanation.