Court approves financially strapped telecom carrier’s bid to continue normal operations as it restructures debt
After several days of bad news, Windstream caught a break as a U.S. federal bankruptcy court approved the telecom carrier’s bid to continue operations as normal while it restructures to meet accelerated bondholder obligations.
The Lowdown: The U.S. Bankruptcy Court for the Southern District of New York granted Windstream’s “first day” motion, which unlocked $400 million of $1 billion in financing from Citigroup. The court’s approval means Windstream will continue with normal operations and pay suppliers in full for goods and services received following the bankruptcy filing.
The Details: Windstream launched a Website — Windstream Restructuring — for creditors, customers, and partners to track its restructuring process and progress. The company says it’s working with the court to ensure it meets its obligations without impacting customers and partners.
The Impact: Under bankruptcy protection, Windstream will have the ability to restructure its debt and maintain normal operations. The company secured $1 billion in debtor-in-possession financing. Between the credit made available by Citigroup and the company’s regular cash flow, Windstream says it has the financing to maintain normal operations while it goes through the Chapter 11 process.
Background: Windstream is laboring to recover from a stinging court loss to Aurelius Capital Management earlier this month. The court sided with Aurelius that Windstream improperly spun off Uniti Group, denying bondholders critical assets that backed up the value of their investments. The judgment meant Windstream is liable to pay Aurelius the full value of its bonds — $310 million — plus interest immediately. The court decision essentially put Windstream in default on its other bonds, totaling $5.8 billion, which forced the bankruptcy filing.
The Buzz: “We are pleased to have received approval of our First Day