Windstream Holdings Inc. has gained approval for a settlement agreement that removes a key obstacle to the company's plan to exit bankruptcy this summer.
U.S. Bankruptcy Court Judge Robert Drain on Friday ruled in favor of Windstream's proposed network-leasing settlement with Uniti Group Inc.
"The proposed settlement is complex and, I believe, critical to [Windstream's] ability to successfully reorganize," the judge said leading up to his approval of the arrangement.
Drain's ruling gives Windstream momentum as it seeks approval of a business-restructuring plan that would allow it to resume operations without supervision from creditors and the bankruptcy court. Windstream projects it can exit bankruptcy in August.
"I believe it is important to give [Windstream] the confidence to move ahead with the reorganization plan," Drain said as he approved the agreement, which is estimated to have a net present value of $1.2 billion.
Windstream general counsel Kristi Moody said Friday that the ruling is a boost for the company.
"Today's ruling is a significant step forward in our Chapter 11 process and keeps us on a path to emerge from restructuring as early as the end of summer, pending regulatory approvals," Moody said.
"The Uniti agreement provides significant and essential network investments for Windstream over the next 10 years, positioning the company for long-term growth."
Drain applauded the companies' "extraordinary mediation efforts" to settle the dispute, citing the 27 days that talks were held.
Approval of the settlement ends a long-running dispute over a $650 million annual master leasing arrangement between the two Little Rock firms. Windstream filed suit last July to alter the agreement, which outlines the company's use of network infrastructure owned by Uniti.
As part of the settlement, Uniti has agreed to invest up to $1.75 billion to improve Windstream's network through 2030. Uniti also will pay Windstream about $490 million in cash and purchase fiber assets from Windstream for another $285 million.
Windstream chief executive Tony Thomas, Chairman Alan Wells and company financial adviser Nick Leone testified in a daylong hearing Thursday as the judge reviewed the settlement. The hearing resumed Friday afternoon with brief closing arguments before Drain gave his approval.
In March, Windstream announced that its leading creditors had signed off on the business-restructuring proposal, which would reduce the company's debt by more than $4 billion and allow Windstream to exit bankruptcy protection by August. The company entered bankruptcy in February 2019.
Drain also must approve that restructuring plan.
Both Windstream and Uniti are scheduled to release first-quarter earnings on Monday.
Business on 05/09/2020