The Federal Communications Commission has blessed the private ownership structure proposed by Windstream Holdings Inc., one of the last major approvals the company needs to exit bankruptcy.
Late Friday, the commission approved the company's new ownership and transfer of unused fiber assets to Uniti Group Inc. under a settlement agreement approved in federal bankruptcy court in May.
Windstream will emerge from bankruptcy protection as a private company owned by its creditors. Elliott Management Corp., a New York hedge fund, will be the largest equity holder, owning about 40% of Windstream. Daily operations will continue to be led by President and Chief Executive Officer Tony Thomas.
Approval was granted to "achieve the public interest benefit of facilitating Windstream's prompt emergence from the bankruptcy process," the FCC said in its order.
The company is awaiting approval from a handful of state regulatory commissions.
"Windstream now is positioned to emerge in the coming weeks from restructuring following FCC approval of our application, which came on the heels of the successful completion of our exit financing," Thomas said Monday.
"Windstream will have a strong balance sheet and liquidity position when we emerge to continue to invest in our business to drive growth."
Last week, Windstream raised $2.15 billion of debt, composed of $1.4 billion of 7.75% senior first lien notes due 2028 and $750 million of 7.25% loans due 2027. The exit-financing package also included a $500 million revolving line of credit.
In July, the FCC asked for public comment on Windstream's application to approve the new ownership group and to transfer its dark fiber assets, which is underground fiber that is not in service, to Uniti. There were no filings opposed to the application, the FCC said in its ruling Friday.
"The proposed transfer presents no significant competitive harms and should result in a financially healthier provider and a stronger competitor to larger integrated providers," the ruling said.
Under the Windstream-Uniti settlement, Uniti will invest up to $1.75 billion over 10 years in the fiber network used by Windstream, which in return will pay about $650 million annually for that access. The agreement also says Uniti will pay Windstream about $490 million in cash and purchase fiber assets from Windstream for another $285 million.
Windstream's restructuring plan, approved in federal bankruptcy court in June, allows the company to operate as a privately owned entity and reduce its debt by about 50%, or more than $4 billion.
Besides lowering its debt, Windstream's new capital structure bolsters the company's ability to expand 1 gig fiber broadband service to more than half of the 4 million broadband customers it serves. Only about 7% of those customers today have access to 1 gig speeds.
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