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Windstream Files for Bankruptcy Protection

Windstream

by Jeremy Peppas

Little Rock-based Windstream Holdings, Inc., filed for Chapter 11 bankruptcy on Monday, the company announced in a press release.

The move was expected, Bloomberg reported, after a federal court ruled that a spinoff of the company’s assets had violated “financial covenants” and the judge, Jesse Furman, ruled in favor of a $310 million judgment for Aurelius, a hedge fund on Feb. 15. Windstream said then that the judgment could lead to bankruptcy.

That came true on Monday.

In a release, Windstream’s President and Chief Executive officer Tony Thomas said, “Following a comprehensive review of our options” it was “determined that filing for voluntary Chapter 11 protection is a necessary step to address the financial impact of Judge Furman’s decision and the impact it would have on consumers and businesses across the states in which we operate.”

Thomas added,“ Taking this proactive step will ensure that Windstream has access to the capital and resources we need to continue building on Windstream’s strong operational momentum while we engage in constructive discussions with our creditors regarding the terms of a consensual plan of reorganization.”

The company setup a website, to explain its plans for the future and they also include a section on frequently asked questions. Among them are: “Is the company going out of business?”

And Windstream said, “No. The company is continuing to operate its business in the same manner it does today throughout the Chapter 11 process. We intend to serve our customers as usual and maintain our relationships with our vendors and business partners.”

Windstream also announced on Monday that Citigroup Global Markets had committed $1 billion in what’s known as “debtor-in-possession financing” and that once it met the court’s approval, that money, along with normal cash generated by Windstream would be enough to cover expenses

“With approval from the Court,” Thomas said, “we will continue paying our employees, maintaining our relationships with our vendors and business partners and serving our customers as usual.”

Before the judgment was announced Windstream stock had been trading at $3.37 a share on Feb. 15 After the announcement it plunged to $1.31 a share, and got down to 48 cents a share before trading was halted as the news of the bankruptcy broke.

Windstream serves about 1.4 million mostly rural customers in 18 states with phone, internet and TV services.

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