Windstream And Uniti: When Financial Engineering Goes Wrong
Sep. 25, 2017 10:17 AM•UNIT
Summary
In 2015, Windstream split its infrastructure to a REIT structure, Uniti. The value creation came from the higher multiple than the REIT market was attributing to cash flow.
Two years down the line, Windstream bonds are pricing a large probability of default, and Uniti shares have almost halved. A Windstream restructuring is a real possibility.
We see more pain for Windstream senior bondholders and further downside for Uniti share price which could fall below USD8 in a restructuring.
We would recommend to wait for a better entry point.